While estate planning is an important task everyone faces at one point, it can get complicated. Oftentimes we are forced to think about our own mortality, and how we want our valuables to be passed along which is never easy. But essentially, the purpose of the process is to provide us peace and clarity, ensuring that once we are no longer here our loved ones and assets will be protected and taken care of the way we desire. There are, however, many grounds for mistakes which can undermine your intent and hurt you financially. Therefore, it is important to acknowledge these common errors in order to avoid them.
Here are some common errors to look out for:
One of the most common mistakes that can be made in estate planning is not making it a priority. For some it may be difficult to even think about their own mortality, while others may believe it's too early or unnecessary. However, ultimately not having an estate plan can put your assets and loved ones at risk. Without a legal document that outlines your wishes, it will be up to the courts to divide your assets which may not reflect your intent. Therefore, whether you are older or younger, it is important to sit down and think about these decisions for your plan.
- Failing to Update Plans
When it comes to drafting an estate plan, it isn't something you can write up once and leave as is. Oftentimes, individuals will write up a plan and not update it for long periods of time. This can leave many detrimental effects. For one, over time families can grow with more kids or grandchildren or some may lose members included in their original plan. Some may add or sell some assets, or open up new businesses. Thus, because there can be so many changes over time, it is important to consistently update your estate plan.
An important aspect in estate planning is naming beneficiaries, these are the people you choose to gain advantages and assets from your estate plan. It is important to note that you should always have more than one beneficiary in the event that one dies, this is what's called a contingent beneficiary. However, a common mistake many do is fail to name a contingent beneficiary which can put their estate at risk for being subject to probate, creditors and even delays. Another common issue with beneficiaries is failing to coordinate them with other aspects in the estate plan. For example, some may change the beneficiaries on their will, but fail to update them on retirement accounts or life insurance policies which often are some of the biggest assets within an estate.
- Failure to Communicate
While discussing your wishes for when you die with your family can be very difficult, it is usually recommended to discuss beforehand. Disclosing your expectations and intentions beforehand can often lessen the likelihood of issues and disagreements in the future. It may also be good to share who you choose as your executors, trustees and beneficiaries as they will play a big role in your estate plan.
- Not Updating Power of Attorney or Health Care Proxy
Every estate plan should include a power of attorney and a healthcare proxy, as these are the two people who would need to step in and make the big decisions when you are incapacitated. A power of attorney is responsible to make financial decisions for you, while a healthcare proxy has one of the most important jobs to make healthcare decisions for you, when you aren't able to. Since these are very big roles, your decision on who should take on these responsibilities may change over time. Therefore, it is crucial you update your plan.
- Not Meeting with an Experiences Estate Planning Attorney
Estate planning is an important matter that should not be dealt with lightly. Working with an attorney can help you get more insight into different important aspects of creating a good plan as well as provide you with other strategies to help you financially.
For any professional guidance or advice on your estate planning needs, contact the Law Office of Inna Fershteyn at (718) 333-2394.