Estate Planning: Avoid Blunders To Build A more Balanced Plan
Estate plans can make use of a variety of legal tools to help ensure that your assets are passed on to future generations in a manner that meets your wishes. There are many ways to do this, but most estate plans include the use of a will, living will and durable power of attorney.
Not only is it important to prepare an estate plan regardless of your financial means, but to make sure it is done wisely. It is possible to avoid an array of headaches associated with a poorly devised plan. The first step in making sure that you have an estate plan that meets your needs without any surprises is taking a moment to become acquainted with these common mistakes.
Avoid These Common Errors
Although the mistakes within a plan can vary widely due to the uniqueness of each plan, frequently made mistakes include:
- Not planning for all potential situations: What if you die but your spouse does not? What if you and your spouse die at the same time? How should the assets be handled if young children are left behind? A strong estate plan should cover a wide array of scenarios.
- Letting everyone know how you plan to distribute your assets: Do not attempt to please everyone; instead focus on making sure your wishes are met. If these wishes are not communicated early on family members and loved ones may feel jilted and think that someone misconstrued your wishes. Potential court battles may be avoided by being upfront with loved ones.
- Leaving enough fluidity to handle potential bills: Not all bills are forgiven at death. Generally, taxes are required after one’s passing. If these taxes cannot be covered by the estate the IRS may request payment from loved ones. Overuse of transfer on death accounts and beneficiary designations can strip an estate of the ability to cover these costs.
- Leaving everything to a spouse: Although this can be done tax-free, it is not always the wisest way to transfer assets. There are tools available that can help reduce the tax consequences of transfers after both spouses die. Not taking advantage of these options with each spouse’s passing can result in steep tax penalties.
In addition to avoiding these mistakes, it is also wise to discuss your wishes with an experienced estate planning and probate attorney.