Mistakes in estate planning are not always noticed right away, but they can quite costly. It does help to have an awareness of the types of mistakes people make regarding estate planning. Here we'll explore some of the most common mistakes and misconceptions.
One common mistake is assuming that estate planning is a waste of time unless one is wealthy. Some people have this idea because some attorneys and financial advisers put a large focus on estate tax planning. At present, estate tax isn't even an issue unless one's estate exceeds $5,120,000. A well-rounded estate planning attorney, however, will address other issues, including incapacity, health care decisions, and inheritance. Good estate planning can address issues at every level of income.
Along with this assumption, there is often an assumption among some people that one doesn't have to worry about estate planning until one is getting ready for retirement. But the reality is that death can come at any time, and it is important to be ready right now. Without proper planning, one's estate can be left in a real mess.
There is a mistaken assumption that drafting a thorough will can allow one to avoid probate. In fact, though, a will only provides a probate court with instructions on one's wishes, but a probate court will still need to get involved. In addition, will contests can drag the probate process out, adding time and cost, as can having property in multiple states.
In our next post, we'll continue exploring this topic.
Source: Forbes, "10 Common Estate Planning Myths That Can Be Detrimental to Your Family," Erik Carter, October 3, 2012.