Our Alpharetta readers know the importance of estate planning. What isn’t emphasized enough, perhaps, is that the estate planning is only as good as the planner. There are many mistakes that can be made in estate planning. Let’s take a look a several common categories of mistakes.
One mistake sometimes made in estate planning is to fail to ensure the estate has enough money to pay creditors. This is often a problem with non-probate estates. If all the estate’s liquid assets are given directly individual beneficiaries, they could be forced to come up with the money to satisfy creditors. Some creditors may not be able to reach beneficiaries for unpaid bills, but the Internal Revenue Service always gets its way. Setting aside certain liquid assets for tax purposes is, therefore, a wise idea in estate planning.
Attempting to be all things to all people is not something that can easily be done in estate planning. Decisions have to be made about who gets what, and it may not be possible to treat different people in the same way. Of course, it isn’t always desirable to do so anyway, but in cases where it is, the best bet may have to be finding a way to reward beneficiaries in uniquely special ways. Even if this can be done, though, it just isn’t possible to make everybody happy all the time. Communication, therefore, is key to avoiding rivalry down the road, rivalry that can drain the estate of value. Failure to communicate is another mistake category all its own. Needless to say, families need to be talking about estate planning along the way so that no surprises take place.
Estate planning professionals are not immune from mistakes in their work, but a good estate planning attorney will know to consider all the angles in any given plan and to ensure that the plan meets the unique needs of the client. For this reason, the do-it-yourself approach is not recommended.
Source: Fox Business, “Duck Estate-Planning Fiascos Before it’s Too Late,” Sheyna Steiner, May 13, 2013.