Everybody makes mistakes. But there’s a big difference between adding too much sugar in your cookie recipe and giving your life savings to the wrong family member after you pass away because you made your estate plan incorrectly. There are a lot of different aspects of an estate plan, so there are a lot of different ways to mess them up. Let’s take a look at 10 of the biggest and most common estate planning mistakes people make, so you can know to beware of them and, hopefully, avoid them.
- Making No Estate Plan at All
Easily the most common estate planning mistake is also one of the most damaging: not making an estate plan at all. Pretty much everyone thinks that an estate plan is useful only for the elderly, but this just isn’t the case. There are few people who won’t benefit from an estate plan that has been customized to their needs, responsibilities, and assets. If you have a sizeable estate, minor children, adult dependents, a small business, a chronic medical condition, or just want to think ahead, then you can benefit from an estate plan and should make one sooner than later.
- Never Making Any Updates
Your life is changing every single day, usually in small ways. You need to make changes throughout your life to keep up, so why wouldn’t your estate plan need updates now and then, too? A big mistake that most people with estate plans make is that they never take them out of their file cabinet for a review and update. If you want to stay on top of your estate plan and make certain it is still going to be useful to you and your family, then we suggest checking it after every major life event and every three or five years.
- Forgetting the Golden Years
The majority of people in their golden years – 65 and up – need some sort of day-to-day care or assistance, like what you can find in a nursing home or assisted living facility. To pay for that help, you need to know where to get the money or, more commonly, how to get financial assistance. Your estate plan should account for long-term care. Even though it isn’t fun to think about, it needs to be done. Otherwise, your estate plan will be incomplete and insufficient.
- Sharing Every Financial Account
Joint ownership is an interesting opportunity to share a financial account with another person, which can be helpful in many situations. However, it can also be detrimental in other ways when you are making your estate plan. Tax risks and property losses could arise depending on who is named as your joint account holder. Before you just start creating a joint account for everything, you should consult with an estate planning attorney.
- Owning Real Estate Separately
Although making every financial account a joint account can have its downfalls, oppositely, it is usually not the right idea to be the sole owner of your real estate. If you name your spouse as a joint owner of your home, then they will assume full ownership of it when you pass away without having to worry about what it says in a will or trust or what happens in probate. Again, talking with a lawyer first is a good idea because putting your child on the title to share ownership is generally not the right move.
- Naming One Beneficiary without Reasoning
To try to keep their estate plans simple, parents will often name a single child as the sole beneficiary of all of their assets. This strategy would make sense when there is only one child, but it can be problematic if there are multiple people who could have been named as beneficiaries. The first issue is that the sole beneficiary could be slammed with tax implications and other financial complications if they inherit your entire estate. The second problem is that people who feel like they have been snubbed by your estate plan might try to challenge your will if it goes to probate, which will slow down the process for everyone.
- Not Minimizing Estate Taxes
The value of your estate will determine how much it is taxed when you pass away. Each state has a different estate tax threshold. The goal of anyone making an estate plan should be to minimize the value of their estate as much as possible to duck under the threshold. In doing so, beneficiaries will stand to receive more assets and finances because less will go to Uncle Sam. Gifting a portion of your assets each year can steadily reduce your estate’s size and value.
- Forgetting Guardianships for Children
Your minor children and adult dependents need someone to help care for them in case you aren’t around to do it yourself. Guardianships allow you to assign someone as the guardian of your loved ones, who become the wards. When you are dealing with all of the property problems in your estate plan, don’t make the mistake of overlooking concerns related to your family, especially your children.
- Overlooking End-of-Life Medical Care
Your estate plan can and should include instructions about your end-of-life medical care that you won’t be able to relay to your loved ones due to being incapacitated, either physically or mentally. You can decide what lifesaving measures you want to be taken, what nursing home you would like to stay in, and more. Not deciding these things in your estate plan forces your loved ones to guess and hopefully match your best wishes, which is not fun for anyone.
- Staying Old School in the Digital Age
Digital assets are commonplace these days. Email and social media accounts are owned by basically everyone, so don’t forget to discuss yours in your estate plan. You can instruct your loved ones to preserve or delete your digital assets and accounts. There might even be accounts that you would like transferred for one reason or another.
Hire an Attorney for Your Estate Plan
The simplest way to watch out for and avoid estate planning mistakes is to team up with an estate planning attorney in your area. If you live in Florida, then Attorney Mark Martella of The Dellutri Law Group, PA is here to offer his professional services. He has been an attorney for more than 30 years, and he has focused on estate planning and complex finance-related cases all the while. Turn his experience into your advantage by working with our firm today.
Call (800) 391-4337 or contact us online. Be sure to ask for Attorney Martella!