Don’t risk making these 11 costly estate planning mistakes!
Unfortunately, estate planning is often viewed as a “luxury” that is only necessary for the wealthy. In reality, a properly executed estate plan is an important financial document that everyone should have, regardless of how many assets they have to their name.
That being said, even if you do have an estate plan, it’s also important to realize that there is no one-size-fits-all approach to estate planning. Many people mistakenly believe that they are properly protected when, in reality, they are not. Below are some of the most common estate planning mistakes (and how to avoid making them).
11 Common (and Costly) Estate Planning Mistakes to Avoid
1) No will or estate plan
Obviously, of all the estate planning mistakes you can make, this one is the worst. Without proper planning, your estate may be tied up in probate court for months or years after your death, at a great emotional and financial cost to your family.
2) Lack of Healthcare and Disability Planning
The majority of deaths occur in hospitals or other institutions. Patients may be incapacitated to the point where they can no longer communicate their healthcare wishes. One of the more common estate planning mistakes is not having an Advance Directive and Healthcare Power of Attorney, which can identify healthcare proxy decision-makers, specify wishes for end-of-life care, and provide a formal plan to control financial and property matters.
3) Lack of attention to digital assets
Without a plan for digital assets and social media, you may lose critical documents, photos, memories, and family records.
4) Lack of attention to your children’s possible future divorces or lawsuits
It’s not fun to think about, but if your children divorce or are sued at some point in the future, their inheritance may be decimated and end up in the hands of those you never intended. A trust can help protect your legacy and your children’s inheritance.
5) Lack of attention to the conscious transfer of family values
Comprehensive estate planning can include family meetings, a family mission statement, and custom planning for children.
6) IRA funds wasted
Retirement account beneficiaries often receive these account funds in a lump sum, creating the potential for a huge and unexpected tax bill. A standalone retirement trust (sometimes called an IRA trust) can protect these funds while still providing for your beneficiaries.
7) Chaotic record-keeping
Good planning is essential to make sure your heirs do not spend months or years trying to make sense of what you left behind. A comprehensive estate plan provides you with a framework for maintaining your vital legal and financial records.
8) Surviving spouse creditors and predators
If your surviving spouse remarries and then divorces, your estate could end up in the hands of people you never intended. Likewise, if your surviving spouse is victimized by financial predators – something increasingly common as the population ages – your family may discover too late that your legacy is gone. A trust can ensure family money stays in and benefits the family.
9) Family feuds over sentimental items
This problem can be avoided with a Personal Property Memorandum, which can account for tangible items like artwork, family heirlooms, and jewelry. In addition to the financial assets, your plan should include careful consideration of important family items.
10) HIPAA privacy lockout
If incapacity leaves you unable to communicate, family members—even your spouse—may not be able to access your medical records because of HIPAA privacy rules. Executing a HIPAA authorization ensures access to medical information.
11) Outdated Estate Plan
You may have a will and estate plan already. Does it reflect your current circumstances, goals, and needs? A comprehensive review by an estate planner ensures that your estate plan reflects your current situation, desires, and needs.
We are here to ensure you avoid costly estate planning mistakes.
Are you ready to sit down with a qualified estate planning attorney to see how you can ensure that your plan does not have any of the above-mentioned estate planning mistakes? If your answer is yes, give Andre O. McDonald, a knowledgeable Howard County estate planning, special needs planning, Medicaid planning and veterans pension planning attorney a call at (443) 741-1088 to schedule a consultation.
DISCLAIMER: THE INFORMATION POSTED ON THIS BLOG IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND IS NOT INTENDED TO CONVEY LEGAL OR TAX ADVICE.