Estate planning, including wills, trusts, and powers of attorney is vital for securing your legacy, but common mistakes can undermine your efforts. Avoiding these pitfalls with the help of a lawyer makes sure that your wishes are honored and your loved ones are protected.
Not Having A Will Or Trust
One frequent error is not having a will or trust. Without these, state intestacy laws decide how your assets are distributed, often against your wishes. For example, a partner or stepchild might receive nothing if you’re unmarried. Drafting a will, even a simple one, clarifies your intentions.
Not Updating Your Estate Plan Regularly
Another mistake is failing to update your documents. Life changes—divorce, remarriage, or a new child—can render your will or trust outdated or, in the case of a will, automatically revoked. A trust naming an ex-spouse as beneficiary could lead to unintended outcomes. Review your estate plan every three to five years or after major life events to keep it current.
Improperly Funded Trusts
Improperly funding a trust is another issue. A trust only controls assets titled in its name, like property or bank accounts. Forgetting to transfer assets into the trust means they may go through probate, negating the trust’s benefits and leaving you with an expensive but useless stack of paper. Work with an attorney to verify all relevant assets are properly titled.
Assigning A Poor Executor
Choosing the wrong executor or trustee can cause problems. An executor manages your will’s distribution, while a trustee oversees trust assets. Selecting someone unreliable or biased can lead to mismanagement or disputes. Choose someone trustworthy, organized, and impartial, or consider a professional fiduciary.
Overlooking Incapacity Planning
Not planning for incapacity is a critical oversight. A will only takes effect after death, but a revocable trust or durable power of attorney can manage your affairs if you’re incapacitated. Without these planning techniques, a court may be needed to appoint a guardian, which is costly and invasive.
Miscalculating Taxes
Ignoring tax implications can also hurt your estate. While most estates aren’t subject to federal estate taxes, high-net-worth individuals should consider different types of charitable or irrevocable trusts to reduce taxable estate value. State taxes may also apply, so consult an estate tax planning lawyer to optimize your plan.
Creating An Estate Plan Without Legal Guidance
Finally, DIY estate planning can lead to errors. Online templates may not account for state-specific laws or complicated family dynamics. A poorly drafted will might be invalid or ambiguous, sparking disputes. Investing in an estate attorney will help make sure your documents are legally sound.
Avoid these mistakes by planning early, updating regularly, and seeking professional guidance from our friends at Aptt Law LLC. A well-crafted estate plan brings peace of mind, knowing your legacy is secure.