Estate planning is a complex and nuanced process, and it’s easy to make mistakes when you don’t have professional guidance. Whether it’s a lack of communication with your executors and heirs, or failing to properly fund your trust, there are plenty of opportunities for you to torpedo your estate plan. Making a mistake in your estate plan could not only prevent your loved ones from receiving their inheritances, but could also stick them with an expensive, emotional, and time-consuming probate battle.
Luckily, working with an experienced estate planning attorney can prevent you from making these 7 common estate planning mistakes.
7 Common Estate Planning Mistakes
Here are 7 of the most common estate planning mistakes people make:
- Not Communicating with Your Heirs. Anyone who is named into a role in your estate plan—executor, personal representative, trustee, etc.—should know what their responsibilities are once you pass away. Furthermore, we encourage our clients to communicate with their heirs and beneficiaries about what they will be inheriting, and why. This can help prevent (or at least reduce) conflict.
- Not Taking Taxes into Consideration. Estate taxes really only affect larger estates, but if you don’t take this possibility into account, your heirs could end up with a nasty surprise as their inheritances get eaten up by taxes. There are numerous strategies you can take now to avoid this situation in the future. An estate planning attorney or financial planning professional can guide you through the tax planning process.
- Not Planning for the Death of an Executor of Beneficiary. If your executor, trustee, or one of your beneficiaries suddenly dies, the courts will step in and make determinations about how your estate will be administered. Since this may be contrary to your wishes, it’s important to plan for these contingencies.
- Not Naming a Beneficiary on Your Retirement Accounts or Insurance Accounts. Retirement accounts and insurance policies are great for estate planning because—when beneficiary designations are set up properly—they pass directly to their intended recipient, without having to go through probate. If you don’t name a beneficiary, however, this advantage is negated, and the accounts may be subject to probate, where it could be claimed by creditors or predators.
- Not Updating Your Plan. If you experience a major life event, you’ll want to update your estate plan right away. Getting married or divorced, having a child (or welcoming a new grandchild), or if one of your beneficiaries develops a substance abuse issue or gambling problems…there are countless situations that may require you to make some updates to your plan.
- Not Funding Your Trust. Many people use trusts as a vehicle through which to pass along their assets, without being subjected to probate court. However, if your trust is not properly funded, it serves little purpose. Your heirs and beneficiaries will still end up in probate court, and your assets may or may not be distributed the way you wish.
- Not Having Contingency Plans in Place. No matter how well you plan, chances are something in your estate will not go exactly according to plan. For each possibility, it’s important to have a contingency plan in place. An experienced estate planning attorney can help with this.
At Miller Estate & Elder Law, we have decades of experience helping our clients with every aspect of estate planning and elder law. We’ve seen every mistake in the book, and are here to make sure you don’t make any of them! Give us a call today at (256) 251-2137 or use the contact form below.