Your estate plan should ease the burden on your loved ones during a time of grief or an emergency. Despite this being one of the best reasons to have an estate plan, there are so many misconceptions when it comes to who estate plans are for or why you need one. The absence of a plan or a poorly-planned estate could mean losing assets you’ve worked hard for, the wrong people inheriting your estate, or your loved ones spending time fighting for your estate in probate. Here are common estate planning traps that people fall into:
Common Estate Planning Traps People Fall Into:
- Thinking they don’t need a will, trust, or other estate planning documents.
- Putting off estate planning because they are not ready to make the necessary decisions.
- Delaying estate planning because they and a spouse or partner do not agree.
- Delaying estate planning until it’s too late.
- Relying on a handwritten will or letter.
- Attempting to dispose of property that is not part of the estate.
- Not executing the estate planning documents with the legally required formalities.
- Attempting to self-amend the estate planning documents.
- Naming the estate as a beneficiary of the retirement accounts.
- Naming the estate as a beneficiary of the life insurance.
- Failing to coordinate the beneficiary designations with between will and living trust.
- Naming a minor as an outright beneficiary of a will, trust, life insurance policy, or retirement account.
- Disbursing funds from trusts to immature young adult beneficiaries.
- Leaving an inheritance directly to a special needs individual.
- Not having a living will and medical power of attorney.
- Not having a financial power of attorney.
- Not doing any planning to reduce estate taxes.
- Not planning for how to pay estate taxes.
- Not maximizing annual tax free gifts.
- Not revising the estate plan after significant life changes.
- Forgetting to update beneficiary designations on life insurance and retirement accounts.
- Leaving a living trust unfunded.
- Failing to destroy prior estate planning documents.
- Not addressing digital assets.
- Failing to name alternates.
- Not telling anyone where estate planning documents are stored.
- Not planning for burial or cremation logistics.
- Choosing the wrong person to act as executor, trustee, or agent.
Don’t fall into any of these estate planning traps. Let us help you create or update the right plan for your goals. If you live in Illinois or Wisconsin, we are here to help. Contact us and let us help you figure out the best path for protecting your family and all you’ve worked for.
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Disclaimer: This article is intended to serve as a general summary of the issues outlined therein. While this article may include general guidance, it is not intended as, nor is a substitute for, qualified legal advice. Your review or receipt of this article by Lexern Law Offices, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG. The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.