Unfortunately, mistakes regarding estate planning abound, and these mistakes can cause serious issues after a person’s death. Your estate plan should be very specific to your particular situation, and should be motivated by considerations for your loved ones as well as sound legal analysis. Take a look at the following estate planning mistakes, and ensure your estate plan is free of those mistakes. Chances are, there is at least one that you may have been guilty of..
The most common estate planning mistake that people make more than any other is believing that estate planning is only for the wealthy, and so they do not have an estate plan at all. The vast majority of us are unsure whether we have an “estate” to begin with, and even if we do recognize that even modest possessions constitute an estate, we are uncertain whether we need a sophisticated plan to manage what happens to those after we are gone. No matter your level of assets, you need an estate plan. Without an estate plan you have given up the ability to determine who will get your property, assets and personal items after you are gone. Without a will, the state will determine who to allocate assets to, and, as you can imagine, that plan is unlikely to meet with your approval. People you would not want to end up with your assets and possessions may actually get them.
The second-most common mistake regarding estate planning is failing to plan for a disability. Those in their twenties, thirties, forties, and even fifties, tend to think they don’t really need to worry about such things until they are older. The fact is, unexpected things happen every single day. An unexpected or long-term disability can often have huge consequences on personal and financial affairs. Having decisions in place as to who will handle your finances, raise your children and make healthcare decisions on your behalf is crucial. Having a power of attorney and/or living trust in your estate plan can completely alleviate any worry you might have regarding a potential future disability or incapacitation.
Failing to update wills and trusts is the third-most common estate planning mistake. As most of us are aware, life brings changes. Marriages, divorces, births and deaths can all result in necessary changes to estate plans. Perhaps the person you named as the guardian for your minor children when they were babies is no longer the person you would choose to raise your middle-schoolers. Perhaps you are divorced, and the last person you would want to receive any of your assets is your ex, yet according to your estate plan, that’s exactly where those assets would go. To ensure the assets you leave behind are given to those you intend, it is smart to periodically update your estate plan to reflect any changes in your life.
Putting your child’s name on the deed to your home is the fourth most-common estate planning mistake. When you do so, you have essentially given your child a large, taxable gift. Although gifts up to $13,000 are exempt from estate tax, your good intentions could create a financial headache for your child. It is much better to simply leave your child your home via an inheritance.
Finally, a mistake made far too often among those planning their estate is choosing the wrong person as executor of your estate. You may believe your child or spouse is best-suited to handle your estate, it could be more productive to find someone who is not as personally invested in the situation.
If you have made any of these estate planning mistakes, now is the time to speak to an experienced, knowledgeable estate planning attorney, who can guide you through the process and help you avoid any critical mistakes.
If you need comprehensive, knowledgeable estate planning advice in McLean, Vienna, Fairfax, Reston Arlington, Alexandria, Falls Church, Tyson’s Corner, Sterling or Great Falls, contact us today or call (703) 938-3510.