Estate Planning Pitfalls to Avoid
Do you recall the last time you went over your estate plan? Should the answer be when you first signed the documentation at your attorney’s office, you are not alone. A lot of us create an estate plan and then fail to examine it for years (and many never do).
It is important, nevertheless, to review a plan once in a while because of ever-changing tax laws and significant life events, like a birth, marriages, divorces, or the worst, death. At the least, you should think about locating and revisiting your estate plan every three to five years, to help guarantee alignment with present laws.
Common Mistakes in Estate Planning and How to Avoid Them
- Financial postponement – Little among us like to think about our own mortality, many superstitiously dread end of life arrangements, and younger people often inaccurately believe that wills and powers of attorney documentation are only for the elderly. Consequently, far too many Americans put off creating the legal documents required to safeguard themselves and the ones the love.
- Out of date wills and documents – If you created a will twenty years ago, but haven’t touched it since then, most likely it is out of date. These types of documents are not a “set it and forget it” answer.
Things to Remember When Creating your Estate Plan
It is advised that people need to review their estate planning documents and beneficiary paperwork every few of years, and always following a change in civil status, including a birth, death, divorces, or marriages — even a relocation should you move out of state.
- Inconsistent beneficiaries – Whereas others make the mistake of modifying their will but forgetting to update the beneficiaries for their retirement accounts (401(k)s and IRAs), life insurance policies, and subsidies, which are usually the biggest assets in their estate. In which can be a costly mistake.
- Failing to title a trust – Trust accounts serve a lot of functions. They can help safeguard assets from creditors, they guarantee your estate gets allocated to your heirs in the time frame and way you desire, and they keep particulars of your financial affairs private — as well as your assets, debts, and named heirs.
- Provoking the estate tax with life insurance – Wealthy individuals that pass away while retaining ownership of their life insurance policy could unintentionally create a taxable occurrence for their heirs. In fact, whereas life insurance death benefits are not liable to federal or state income taxes, revenue might still be liable to estate tax.
- Appointing your children as co-owners of your assets – Is one other estate planning no-go is to appoint your children as co-owners of your assets, in which provides their creditors liberty to your money.
A better alternative is to appoint your child your power of attorney and payable-on-death beneficiaries to your financial institution or brokerage accounts, in which allows them to access those accounts when needed throughout your lifetime but retains those assets out of your child’s estate — and out of the hands of their creditors.
Reviewing And Updating Estate Plans Regularly
A lot of individuals go over their estate plan routinely, usually when going over their whole financial plan. This can be accomplished annually, biannually, or quarterly; for estate planning particularly, the overall suggestion is at a minimum of every 3 to 5 years or when there is a life occurrence. You may want to get your attorney or tax consultant’s assistance.
Going over your plan at regularly as well as when significant life events happen, is going to help guarantee that your legacy, each financial and otherwise, gets passed on according to your wishes and that your beneficiaries get their benefits as streamlined as possible.
The pandemic looks to have generated a bigger interest in estate planning, in which includes a will and other legal documentation that address end-of-life considerations. Whether you have just a will or a more considerable estate plan, a review should be carried out every few years at a minimum, although there is a plethora of reasons to do so more often.
Seeking Professional Advice to Ensure A Comprehensive Estate Plan
An estate planning lawyer can assist in guaranteeing that your family and the ones you love are taken care of following your passing. Below are a couple characteristics to look for in a lawyer.
A Lawyer with a Specialization in Estate Planning
It’s probably clear to choose a lawyer that specializes in estate planning. Estate Planning law is very detailed. But a lot of individuals choose lawyers that only have a little knowledge about this field. It is wise to choose a lawyer that specializes in estate planning since they are much more knowledgeable.
Good Listening Skills
If you’re searching for legal counsel, you need to be sure you retain a lawyer with a good listening ability. If you find that a lawyer is not very good at listening to you, you should search for another lawyer. An observant lawyer is going to be more interested in your concerns in relation to your estate plan.
Clear and Dependable Communication
Any respectable estate lawyer should have good communication ability. If your lawyer does not know how to communicate with you, you may not know if your estate plan is emerging how, you want it. You are going to want a lawyer that is going to explain each step of the process.
Quick and Efficient
Nobody wants a lawyer that takes longer than usual to complete various tasks. But several lawyers take longer than required to accomplish things. Should you already be older, you do not want to wait any further in setting up your estate plan. You’ll want to be sure you avoid probate.
Plenty of Experience
Experience is vital for any lawyer. You do not want a lawyer just finishing law school. Whereas they might be familiar with the fundamentals of estate law, they may not know how to solve new and unanticipated problems. That is especially vital if you require help with blended family estate planning.
Guides You Through the Process
A good lawyer is going to make sure you never lose your way in the estate planning process. This is important since this process can be convoluted if you’ve never experienced it before. A respectable lawyer is going to explain each part of the process and why each part is important. Should you be a business owner, the estate planning lawyer is going to need to know about legal issues associated with business law.
Keeps Your Best Interests at Heart
Any respectable lawyer should always put your interests and requests first. A lawyer’s role is to advise you in the most ideal way possible. However, if you want things done a particular way, the lawyer should honor your wishes. You need to be sure of the lawyer that you choose.
In Conclusion
Creating an Estate Plan is one of the best things you can do for your family and the ones you love. However, don’t let your good faith fall out of mind because you make any of these unintended Estate Planning mistakes.
Arizona Family Law
Naming guardians in your will can be part of your estate plan. You may think you’re too young or don’t have enough money to justify the expense, but if you have children, you have priceless assets. There are many considerations when naming guardians for your kids. However, the process doesn’t have to be expensive or complicated.
There’s nothing better than the peace of mind you will have knowing you’ve protected your family at a time when they need it most. Let us help. Schedule a consultation or contact Ogborne Law, PLC of Arizona today.
