Estate Planning – The Most Common Mistakes
By Thomas McNally
Your estate consists of the assets that you will pass on to your beneficiaries
when you pass away. Estate planning means deciding where your assets will go
when you die. It takes time, thought, and the knowledgeable assistance of a
qualified attorney.
Even if you diligently plan your estate on your own, it is easy to make mistakes.
Mistakes can result in portions of your estate being unnecessarily taxed and
assets going to the wrong beneficiaries.
We have compiled a list of some of the most common mistakes individuals make
in estate planning. Please review the list, but also plan to meet with a qualified
attorney to review your unique estate.
Failure to Prepare
One of the most common mistakes people make when it comes to their estate is
that they simply fail to prepare a plan. Many people, especially the young and
healthy, never even set up a Living Will. Living Wills are important to have
at any age because they serve as a directive in the event that you become incapacitated.
Even though far fewer young people plan their estates, more than twice as many
20-somethings die in car accidents than 60-somethings. Therefore, it is crucial
that you plan your estate regardless of your age, health, or income level.
Choose your Beneficiaries
Your beneficiaries are those individuals who will inherit your estate when you
die. It is important that you carefully consider and name your beneficiaries.
Choose the appropriate individuals for the estate you will be leaving behind.
Many times, beneficiaries are children and spouses. However, if you have young
children, you may not feel comfortable setting up your estate so that they inherit
a large sum of money directly. How will they spend it? Are you sure that they
would make wise choices?
If you would like to have more control over the estate after you die, then
it is important that you set up a Trust for your beneficiaries. By establishing
a Trust, you can allocate a certain portion of your estate towards a child’s
education, first home, or other purpose of your choosing. Consult with a qualified
attorney for more information about how to set up your estate for your beneficiaries.
Choose your Agent
Central to estate planning is choosing people to make decisions for you both
during incapacity and after your death. These people include trustees, guardians,
agents, and beneficiaries. Make sure that you select an agent who knows you
and your wishes well. He or she will speak for you when you cannot, so it is
vitally important that he or she knows you well. Make sure you and the agent
have a clear understanding of his or her role in your estate and that you have
clearly communicated your desires.
Leaving Assets
A significant portion of your assets might be vulnerable to estate taxes after
you die. However, there are ways to leave behind an estate without losing most
of it to taxes. It is important that you consult with a qualified attorney to
discuss the most strategic methods for establishing your unique plan. A well-crafted
plan will ensure that your beneficiaries get the most benefit from your years
of hard work.
Review your Estate
Because life events, such as divorce, loss of job, etc., may change your assets,
it is important to periodically revisit your plan to ensure that it is always
current. Many people die without reviewing their assets, so their plans cannot
be carried out as they had desired. By regularly reviewing your plan, you are
able to help your beneficiaries inherit the assets you leave behind for them
without having to fight for them in court or with other beneficiaries.
About the Author Thomas McNally is the staff writer at the National Directory of Estate Planning, Probate & Elder Law Attorneys. McNally stresses the importance of finding a qualified estate planning attorney to ensure that your estate passes to whom you want, when you want, and is carried out in the manner you've chosen.
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