The holidays are a special time of year for families to gather and spend time together. For parents and grandparents, the holidays can also be an occasion to update an estate plan. Life events, such as the birth of a child or grandchild, may have occurred since an estate plan was last revised. Plus, changes in tax laws, investment markets or the sale of assets may require additional planning. With everyone in the same place, and a new year around the corner, there may be no better time to make estate planning decisions.
There are, however, some frequently seen mistakes to avoid. Let us share with you the top five we have seen this year.
- Thinking you do not need an estate plan.
Obviously, you need an estate plan before it can updated. Unfortunately, too many people underestimate the value of a comprehensive plan, or delay creating one, ultimately to their disadvantage. It is critical to understand that outside of a legally sound plan, there is no guarantee that your property and your wishes will be carried out the way you want them. In fact, not having a plan can leave important decisions in the hands of others.
- Viewing an estate plan as being only about money.
It is true that estate planning involves passing property and investments to family members, loved ones, and other designated beneficiaries. This is typically achieved through a Last Will and Testament or a Trust. Other important documents also are involved, such as a Living Will, which ensures that your end of life medical wishes are followed.
- Failing to consider durability.
Whether because of an accident, health problems or elder age, losing the ability to competently make decisions is a significant concern. Even if you are young and healthy, preparing a Durable Power of Attorney would allow a spouse or trusted confidant to act legally on your behalf.
- Failing to Address Potential Tax Issues.
As the saying goes, the only two certainties in life are death and taxes. Do not wait to take taxes into account. There are multiple ways to reduce an estate tax burden, one is to gift your children assets while you are still alive. The IRS currently allows up to $15,000 per year, per child. This is something to discuss with your attorney, however, as uncompensated transfers can raise issues later on.
- Not seeking expert advice.
Some things you can learn to do yourself but even the most self-reliant people should consider contacting an experienced attorney for estate planning guidance. Your attorney has a firm grasp on any applicable laws in your state, and be able to help craft an airtight plan that will far outweigh the downside risks of doing it on your own.
We know this article may raise more questions than it answers for you. Do not wait to contact our office with your questions! We are here to help you create and maintain the estate plan you need.