“7 Common Mistakes of Estate Planning” During a person’s lifetime, there should be an accumulation of assets that can be passed on to succeeding generations through Estate Planning after the person dies. The natural succession in most instances is from one spouse to the surviving spouse, then, to their children and grandchildren, and in some cases designated charities.
It is tragic that the average person takes more time to plan the family vacation than to plan the family’s future. In the event of your death, dealing with your estate is much easier (and cheaper) for your family if you have a fully completed living trust.
Lack of estate planning is a disaster waiting to happen. Sadly, that disaster can happen to the people you care about most. Even those who have prepared a traditional will can, upon their death, thrust their loved ones into a huge mess.
All too often there are unresolved questions such as:
• What will happen to your business?
• Who will have access to your bank accounts?
• Who inherits your personal property?
• What happens to your home and other real estate?
• How will you ensure the care of your minor children? Or your pets?
Even though planning your estate isn’t an enjoyable job it’s necessary so that you can efficiently and successfully transfer all of your assets to those you leave behind.
With a bit of careful planning, your heirs can avoid having to pay estate taxes on your assets. As well, a well-planned estate will avoid confusion for your loved ones.
A person who does not leave a will misses out on a golden opportunity to specify important personal preferences.
These preferences include a statement about preferred funeral and burial wishes, your preferred guardian for your minor children,
Still, with all the advantages of estate planning, many people make a great many mistakes in the process. The most common mistake when it comes to estate planning is not getting around to doing it at all.
Make sure that you take the time to plan at least the financial portion of your estate so that you leave your loved ones behind with some amount of security.
The following 7 Common Mistakes of Estate Planning often put families into great difficulty after a loved one’s passing.
1. Don’t fall into the trap of thinking that estate planning is just for rich people. This is completely false as planning your estate is essential for everyone who has any amount of assets to leave behind. Many people don’t realize that their estate is as large as it really is, especially when they fail to take into account the assets from their home.
2. Remember to update your will and to review it at least once every two years. Factors that can change information about your beneficiaries include deaths, divorce, birth, and adoption. As your family structure changes so do the change in your assets and who you want to leave them to.
3. Don’t assume that taxes paid on your assets are set in stone. Talk to your financial planner about ways that your beneficiaries can avoid paying taxes on your assets. There are several strategies for tax planning so that you can minimize taxes or avoid them altogether.
4. All of your financial papers should be in order so that it’s easy for someone to find them. Make sure that one of your loved ones has information on where to find the papers necessary for planning after your death.
5. Don’t leave everything to your partner. When you leave all of your assets to your spouse you are in reality sacrificing their portion of the benefit. You’ll get an estate tax credit but will forfeit part of this if your spouse is your only beneficiary.
6. Ensure that your children are well planned for. Many people take a lot of time deciding what to do with their assets and forget that they need to appoint guardianship for their children. There are many details to take into consideration when it comes to guardianship.
7. Not understanding the importance of mental capacity when preparing a will
In the majority of estates, the presumption of a will’s validity is never questioned.
But in some situations, people who feel that the will’s contents are inappropriate may make a claim to the executor that the deceased’s last will was not valid for some reason, most likely including one of these claims:
• It was not signed properly and therefore is not valid.
• The deceased person did not have testamentary capacity when it was signed and therefore the will is not valid.
• There was someone in the picture at the time the will was being prepared and signed who exerted undue influence. This influence affected the deceased’s decision making, and therefore the will is not valid.
The best strategy to avoid the hardship of litigation over your estate is to find and hire a good lawyer, experienced in these issues, to assist you in increasing the likelihood of a positive outcome.
The above 7 Common Mistakes of Estate Planning are very common when people are planning their estate. Take the time to plan for your death even though you think that you have years before it becomes an issue. The key to successful estate planning is being prepared.
The impact of dying without a will includes great uncertainty in the short term, significantly more time and expense for your family and administrator in the medium term, and the possibility of long-term heartbreak and expensive litigation if the distribution of your estate is unacceptable to the people you leave behind.