It’s human nature to avoid thinking about your post-mortem plans: After all, it can be uncomfortable for most people to even imagine their life coming to an end. However, it’s crucial that you have an effective estate plan in place so that your loved ones continue to live in comfort after your death. You may also have a legacy that you want to protect, which can only be accomplished by creating a comprehensive suite of estate planning documents.
At Busch, Reed, Jones & Leeper, P.C., we can help you navigate the often-murky waters of estate planning without any additional stress on your plate. Detail-oriented and professional, our legal team is committed to your satisfaction, and to ensuring that you fully understand the needs of your estate plan.
Here are the top 10 most common estate planning mistakes that we see:
- Leaving out plans for young children and minors. If you have any children or dependents in your family, it’s important to account for their needs by appointing a designated guardian in your will. When you have substantial resources, it may also benefit you to create a living trust for each child, which will be managed by your trustee.
- No residuary clause. A residuary clauses acts as a “catch-all” for all the properties and assets that you may forget, as well as those that you don’t know about. Whether it’s an antique necklace in the attic or an extra strip of land on your property, a residual clause will cover anything that falls through the proverbial cracks.
- Forgetting to fund a living trust with assets. Many people think that a trust is automatically created as a fund, but in order to make it effective, you’ll need to fill it with properties and assets. If you don’t remember to do this or leave something out, the items will have to go through the probate process, rather than directly to the recipient of the trust.
- Failing to account for conflict. As much as we want to believe that our loved ones will cooperate after our death, this just isn’t always the case. Even if your family seems relatively well-adjusted, conflicts often arise over beloved belongings and cherished properties. Make sure you take this into serious consideration when bequeathing anything, particularly among sibling groups, who can be competitive.
- Poor communication with trustees, guardians, and beneficiaries. It’s important to inform your beneficiaries about your plans before you die, to help eliminate the risk of conflicts and prepare them for your death. It’s perhaps even more important to notify your trustees, guardians, and executors, both to ensure that they can perform the job and to prevent any miscommunications.
- Picking an inappropriate trustee or will executor. An executor or trustee has enormous power over your family’s financial future, and may also have power over important life decisions such as nursing home selection, education, and more. This is why it’s important to select someone that you trust to do the job correctly and carefully – and that you provide a backup in the event of their death.
- Not accounting for income and estate taxes. There are many ways to minimize your tax burden through effective estate planning, but when you fail to consider this aspect of your plans, your loved ones could be grappling with the costs for years to come, instead of enjoying your gifts and inheritances. Make sure that you make gifts to reduce your estate taxes, and consider the tax burden for each inheritance.
- Creating estate plan documents on your own. While there are many “estate plan preparation” services and software platforms out there, it’s strongly advised that you do not try to prepare your own suite of documentation. Estate law is incredibly complicated, and there’s always a strong chance that you will forget or ignore a key element of your will, trust, or power of attorney (POA) documents.
- Forgetting to regularly update your will or trust. Experts recommend that you update your estate documents every three to five years, and especially after a major life event. This will ensure that the documents are truly “living” and reflective of your present will, should a major accident arise.
- Getting too specific about investments in your will. While specificity is important in estate planning, it’s best not to get too granular about monetary investments. Listing exact amounts may cause problems with inflation and depreciation.
