Eight Estate Planning Mistakes
Avoiding these common mistakes can help make life easier for those who survive you.
- Failing to plan. Many people simply delay the drafting of an Estate Planning.
- Failing to update an Estate Plan regularly. Many times, when an estate plan is originally drafted to the time of death, many things have changed, from new assets to new family members.
- Not having a current Financial Power of Attorney or Advance Medical Directive. Having a financial power of attorney and advance medical directive is important so that your agents can make decisions when you are incapacitated.
- Improper titling of assets. Having the wrong beneficiary named on retirement accounts, life insurance policies, and trusts regardless of what your will says, your accounts will override it.
- Naming just one beneficiary. You should always designate a contingent beneficiary in the event that the primary beneficiary passes away before you.
- Failing to properly fund your Trust. Trusts play a crucial part in estate planning, but they are useless if not properly funded.
- Not taking special needs into account. If you plan on leaving property to a beneficiary who is receiving government benefits which contain asset limitations, the individual may become disqualified from receiving their benefits.
- Failing to consider Estate taxes and income taxes when formulating an Estate Plan. Many people simply add their children’s name to assets without considering the capital gains tax consequences.
Why Do You Need an Estate Plan?
Brian M. Spern, Estate Planning Attorney
The primary purpose of estate planning is to preserve your wealth and try to ensure that what you spent a lifetime achieving is transferred to the proper, designated beneficiaries at the time and in the manner you chose with minimal costs, tax burdens, and the least amount of pain and suffering. The estate planning objectives that most people have can be grouped into two major categories: financial and non-financial. Most of us have accumulated some kind of financial wealth, that is, things that can be measured monetarily. We have also accumulated non-financial things, or personal possessions. These are items that mean a lot to us like heirlooms and family traditions. Both of these should be accounted for in your estate plan.
Important Estate Planning Documents:
Documents to draft and keep updated
Your Will: First and foremost, you should have a will – and keep it updated.
Living Will, Advance Directive, Health Proxy and Durable Powers of Attorney for medical wishes. Your family members will not be left guessing your wishes if you have clear instructions that are expressed in these documents.
Durable Financial Power of Attorney for financial activities should you become incapacitated.
Review of all beneficiary designation forms on all of your Trusts, retirement accounts and life insurance policies. Many people feel that if they have a will, retirement accounts and life insurance policies will be distributed according to these documents. Please be aware that the beneficiaries designated on your retirement accounts and life insurance policies will override everything – including your will, trust or any other estate plan. Make sure that the beneficiaries are consistent in all cases.
Review titles on all non-retirement and non-life insurance assets. For example, joint tenants, will override everything, including your Will, trust, and any other estate plan.
Need an Estate Lawyer?
Attorney Brian Spern can assist you and your family. Brian’s areas of law concentration include Elder Law, Probate and Estate Administration, Estate Planning, Fiduciary Litigation, and Real Estate Litigation. He is admitted in Maryland, the District of Columbia and New York.
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Office: (410) 580-5497