7 Common Estate Planning Mistakes to Steer Clear Of
Estate planning, as long as done properly, can bring you immense peace of mind. You’ll know for certain that your family, assets, and interests are protected even after you’re gone.
However, this can also go sideways.
Whether you decide to create a straightforward will or work with experienced estate planning lawyers in Utah to write out an elaborate trust, you need to avoid certain costly mistakes.
In other words, the more carefully you plan your estate, the better the outcome will be for your children and beneficiaries.
Even the slightest oversight or improper planning can misfire in conveying your intent and greatly hamper the financial legacy you leave behind. Further, it can cause added stress for your next-of-kin in their moment of grief.
While estate planning can go wrong in several ways, our estate planning lawyers commonly come across the following mistakes.
1. Not Making Time to Plan in Advance
A lot of people make the grave mistake of postponing their estate planning. This means your estate plan will not be completely ready when you need it to be, and you’re putting the financial future of your estate, legacy, and loved ones at great risk.
If you haven’t already started your estate planning, the time is now. Make the time to touch base with an experienced Salt Lake City Utah estate planning lawyer and get started. If you have a plan in place but it hasn’t been updated in a couple of years, get it reviewed without further ado.
2. Naming a Sole Beneficiary
Ideally, you should have more than one beneficiary designated for your assets. In the unfortunate event that the beneficiary dies before you do, you’ll need a contingent beneficiary – someone to take the deceased person’s place.
It’s also a good idea to have more than one contingent beneficiary listed. In fact, make sure to list primary and multiple contingent beneficiaries for each asset, account or policy.
3. Not Mentioning Power of Attorney or Healthcare Representative
It is crucial to name a Power of Attorney and/or a healthcare representative as they’ll be the ones making all the important decisions on your behalf, should you become incapacitated or disabled. In most cases, these roles will be revoked after your death.
Even if your living will doesn’t include a Power of Attorney or healthcare agent, you can ask your Utah estate planning lawyer to prepare legal documents that name a trusted decision-maker who can make financial and medical decisions for you.
4. Not Including Your Funeral and Burial Wishes
Verbally informing your loved ones about your funeral and burial wishes may not always be enough. Arranging funerals can present several financial and logistical challenges. These concerns are very real, and overlooking them can pose problems for family members involved in the estate.
Speak with your estate planning attorney about this. They’ll help you work out the nitty-gritty and include terms for this aspect in your estate planning.
5. Putting Your Children’s Name on the Deed to Your Home
Writing your own will and putting your adult child’s name on the deed to your home to protect it from creditors (or to simply transfer it to your heir) can seem convenient. But by doing so, you’re essentially handing over the title to your home to them.
In the worst-case scenario, your child can record the deed with the relevant municipal agency and displace you from your own home. Or they can sell the home unbeknownst to you, and keep the profit for themselves.
Yet another concern is, by titling the home in your child’s name during your lifetime, you’ll be giving them a taxable gift. Your children will, therefore, have to pay a gigantic sum that could have been averted had they been granted the deed after your demise.
An estate planning lawyer can help you avoid this unnecessary tax while passing your home or its value to your heirs tax-free.
6. Choosing the Wrong Representative
Deciding on the best person to execute your estate, serve as a trustee of a trust fund or even as a guardian to minor children can be a tough call. Most often, the surviving spouse becomes the person of choice, but what happens if they’re incapable of managing complex probate? After all, not everyone is proficient in finances, investments, tax laws, and so on.
Even naming your adult child as your representative can complicate matters. For instance, they may disagree with your decisions on beneficiaries and bequests. As a result, they might decline to fulfil the terms of your will. Or they may have other priorities that might not allow them to fit into the role of a responsible trustee or guardian.
You should know that you don’t necessarily have to choose a representative from among your family members. You can always consult your estate planning attorney and figure out other options.
7. Not Updating Your Estate Plan Regularly
Creating an initial estate plan is a positive first step, but your work doesn’t end there. It’s vital that you regularly review and update it every few years to keep it relevant.
For example, you may decide to get a divorce, but your living will might still mention your ex-spouse as your healthcare representative. This may not work out well for you.
Hence, make sure to update your plan as you undergo any of the following family and life changes:
- Marriage or remarriage
- Birth of a child
- Starting a new business
- Buying a new home
- Death of your minor children’s guardian
- Death of a beneficiary
If your original will ceases to reflect your intentions after the occurrence of any of the above events, you’ll need to update it as soon as possible. Failure to do so will leave you and your loved ones stressed. It’s best to engage the services of a knowledgeable estate planning lawyer and have your will, trust, retirement accounts, and so on reviewed and updated at regular intervals so they’re in accordance with your current circumstances.
Let Our Experienced Estate Planning Attorneys Help You
Creating an estate plan is one the wisest and the most benevolent things you can do to protect your near and dear ones even after you’re gone. However, you need to ensure that your intentions aren’t put out of context because of an avoidable error in your plan. Fortunately, a seasoned estate planning lawyer can help you avoid this trouble.
The Salt Lake City Utah estate planning attorney at Henriksen & Henriksen can help you and your family set up an entire estate plan or complete just one piece of it. We can also assist you with changing or amending any of your past estate planning documents. Call us at (801) 521-4145 or book your 15-minute free consultation through our appointment calendar today.