Mistakes to Avoid in the Estate Planning Process
If you have any kind of assets at all, you need to have an estate plan. Even if you are not wealthy or have significant assets, having an estate plan allows you to determine who will receive your assets when you die. The biggest mistake is not having an estate plan at all. The cost of creating an estate plan with an experienced and qualified estate planning attorney is much less expensive than the estate and trust litigation your family may have to be involved in after your death. Other common mistakes involved in estate planning are listed below.
- Failure to Update Your Estate Plan in Writing. Any time a major event happens in your life (birth, death, marriage, divorce), you need to revisit your estate plan to ensure that it still accurately reflects your wishes. If it does not, you will need to change it in writing through the correct legal means.
- Choosing a Wrong Trustee, Personal Representative, or Executor. Ensure that you choose wisely regarding the person handling your finances after your death. Make sure to choose someone with the least potential for disagreement. Opting to choose a neutral third party is typically a wise decision.
- Not Planning for Disability. Life is unexpected. If you become disabled, who will handle your finances? Ensure that you choose a representative that can handle the management of your assets, finances and other important issues of your estate.
- Not Including a Residuary Clause. A will and a trust should both include a residuary clause that handles any property that may have been overlooked or not disposed of in the will or trust.
- Not Planning for Minors. An experienced estate planning attorney will help you determine how best to distribute assets to minors, and how they will be able to receive their inheritance after your death.
- Forgetting Income Tax. They say that all that is sure in life are death and taxes. Your estate may be subject to either state or federal income taxes, or both. Protecting your estate from tax liabilities as much as possible is important and can be discussed with an experienced estate planning attorney.
- Titling Assets Incorrectly. Beneficiary designations become complicated when there is more than one beneficiary. States typically recognize joint ownership with rights of survivorship for spouses. However, secondary beneficiary designations can create complex legal issues and need to be handled correctly or your wishes regarding your assets may not be upheld.
- Failing to Fund Your Living Trust. You must fund your living trust with assets. A will is different than a trust. A living trust must be funded while the trust maker is still alive. Oftentimes, a person will fail to fund their living trust and then it ends up going through the probate process against the wishes of the original trust maker.
- Failure to Communicate. Once you have decided what your estate plan will be, it is important to convey those wishes to the parties that will be involved. Your children, a successor trustee, a beneficiary all need to know the roles they will play once you die and your estate needs to be distributed.
- Not Meeting With an Experienced Estate Planning Lawyer. The most serious mistake that anyone can make is trying to do estate planning independent of an experienced estate planning lawyer. Having an estate planning attorney listen to your wishes will ensure that your legal rights are protected, and your assets will be distributed according to your plan.
Don’t hesitate to contact the experienced Prince Frederick estate and trust planning attorneys serving southern Maryland at Meng Law at 410-535-5500 or online today for a free consultation. We are eager to assist you today.