Estate planning can be a challenging process, no matter how many or how few assets you possess. A well-drafted estate plan should provide for all contingencies and should clearly represent your wishes on how your assets should be managed and distributed among your family.
Unfortunately, there are a fair number of mistakes many people make while creating and maintaining their estate plans. The following estate planning mistakes are entirely avoidable, but only if you make the effort to keep your documentation up to date in terms of reflecting your current wishes.
Mistake #1: Failure to Update Beneficiary Forms
Many people don’t regularly update their estate plans, which can have unintended and serious consequences. In many ways, an estate plan is a “living” group of documents that aren’t static, but reflect your family’s changing circumstances. In order to best represent your contemporary interests in passing on your assets to your family, an estate plan’s beneficiary forms must be updated regularly. This allows your Personal Representative to distribute your assets swiftly and accurately, without additional confusion and excess court fees.
Major life events can precipitate the need to update beneficiary forms. A divorce is a prime example. An ex-spouse must be explicitly removed as a beneficiary from life insurance policies and the like, or else they will receive those assets, regardless of what you have put in your Will. The same goes for children born after your documents were initially created. Updating your beneficiary forms allows the proper beneficiaries to take control of certain assets without further legal hurdles.
Mistake #2: Outdated Tax Considerations
Estate taxes tend to change only marginally from year to year. But over the course of decades, your tax considerations may change substantially, requiring you to update your plans. For those with estate plans today, this need is particularly acute after recent changes made to the estate tax code made by the 2017 Tax Cuts and Jobs Act.
Without ensuring that new laws do not negatively affect your estate plan, a considerable portion of your assets may be paid away in taxes before a cent ever reaches your family. As such, this type of updating is crucial to their future financial security.
Mistake #3: Not Coordinating Wills and Trusts
Estate planning experts often see conflicting language between wills, trusts, and other documents. This can cause a great deal of legal confusion that can cost thousands of dollars and take several years to unwind.
Even if your will says one thing, you must remember that conflicting language in an estate plan can negate your wishes entirely. Also, failure to coordinate these important documents can result in extra taxation caused by inefficient asset inheritance.
Mistake #4: Trying to Do It Alone
Perhaps the biggest mistake an individual can make is trying to draw up an estate plan on their own. An estate plan is a complicated group of documents full of complex legal language that requires an expert to properly interpret. As such, you should always turn to estate planning experts like the team at SLN Law.
Their knowledgeable team members can help you to not only start an estate plan, but also keep an existing plan updated. Together with SLN Law, you can avoid these troublesome pitfalls and gain peace of mind when it comes to the future of your key assets.