In an earlier blog, we wrote about the importance of early estate planning. Deciding to plan for your estate is the first step to avoiding costly estate planning errors. However, there are a number of other estate planning mistakes that may end up costing you and your family time and money. Retaining an attorney can help you avoid making these costly errors and give you peace of mind knowing your family will be secure in the future.
A will is the most commonly used estate planning tool. A will allows individuals to plan how their property is to be distributed after they die. However, simply creating a will alone may not be enough to accomplish your estate plans. For example, certain financial assets, such as IRAs or 401(k)s, may require you to complete additional documentation, including beneficiary designation forms, before these assets can be distributed to your children. After taking inventory of all your financial assets, including life insurance, retirement accounts, and bank accounts, your attorney can help you obtain and complete the necessary designation documents.
Another common problem that arises with estate plans is failing to make timely updates to your existing estate plan. Oftentimes, people go through the effort of creating a comprehensive estate plan and then never think about it again. As time passes,people go through a number of life events, including moving, the birth of a child, or even a second marriage. Estate plans may need to be changed to adapt to these significant life changes. They may also need occasional updates in light of ever-changing state or federal laws. Instead of filing away your will in the bottom of a drawer, make sure you keep a copy available so that you can occasionally review your estate plan and keep it up to date with necessary changes.
When making estate plans, individuals should also think about what might happen if they become ill, incapacitated, or disabled. Estate planning should also include discussing an advanced health care directive or durable power of attorney which clearly and concisely outlines your personal decisions on these matters. An advance health care directive, sometimes called a living will, sets forth your healthcare wishes in the event you are unable to communicate. A durable power of attorney gives another person the power to make medical and financial decisions on your behalf if you are unable to do so. In some cases, an individual may want to designate one person to handle their health care decisions, and another to deal with finances.
Before naming a trustee, executor, or giving someone power of attorney, make sure you have considered their ability to carry out your wishes. Giving someone else the power and authority to handle your estate or trust is a lot of responsibility. Talk to these individuals to ensure they understand what may be required. Some people may not have the time to properly carry out your estate plans, or be unwilling to take on that role.
If you have any questions about estate planning, Butterfield Schechter LLP is here to help. We will answer all your questions and make sure your estate plan will provide for your loved ones and avoid costly mistakes. Contact our office today with any questions on how we can help you succeed.