Top 5 Universal Estate Planning Mistakes to Avoid
As the saying goes, “Death and taxes are something you simply can’t ignore.” Both are inevitable and although most people understand this phenomenon and in turn, prepare by paying their taxes on a quarterly or yearly basis and others set up their estates to ensure that their affairs are in order and their families are protected when they make their transition. For many, however, death is simply too scary, painful and heart wrenching and many people choose to not even think about it. Most realize that they will eventually pass on and have a general mental vision of what they want to happen to their estate but, for one reason or another, they fail to write it down or even when they do, they don’t keep it regularly updated. In fact, studies as recent as the last quarter of 2015 show that only 34% of Americans have a drafted will, while 69% have considered it but delayed doing anything concrete.
The common barriers to estate planning include statements such as the following:
- “I don’t know where to start!”
- “I don’t know how to do it.”
- “I’m young and have a lot of time to worry about that later on.”
- “I don’t have that much stuff anyway. It can wait.”
- “That’s too depressing to think about. It’s like I’m planning for the day when I’m not around anymore.”
- “My parents (spouse, boyfriend, sibling) will take care of that.”
Fortunately, there are a number of outstanding legal firms that can help with estate planning. Whether you’re looking for advice on how to divvy up assets, the legal ramifications of disinheriting a family member or leaving them a certain asset, or a bit of legal guidance about the division of assets or maintaining your estate’s value, an estate planning attorney can assist you. When hiring one, make sure that you provide them with accurate and detailed information to avoid confusion and misinterpretation. You should also be aware of the following common estate planning mistakes.
Mistake #1: No Plan
When it comes time to face estate distribution, there are laws to be observed and not having a plan means losing a substantial part of that estate to the state or persons who no longer deserve a portion of it (e.g., an ex-spouse). If you want to ensure your wishes are carried out and that family and loved ones are protected, sit down with an estate planner and work out how the assets will be divided in full compliance with the law.
Mistake #2: Agreeing on Joint Ownership
Joint ownership means that the individual listed as owner of the assets has a legal right to control over the assets. This could tie up your assets in court if the joint owner has his own agenda and attorney, and is saddled with legal problems like poor credit and debt. Furthermore, if you make one child a co-owner, and leave the other children as heirs, there may be an imbalance in the distribution of assets. Finally, as co-owner, this person will have a legal right to every business decision regarding the assets from the moment he or she is given joint ownership status.
Mistake #3: No Named Guardian
Parents often do not even think about naming a legal guardian for their minor children. If this happens, the courts are most likely to assign a person whom the parents may not approve. To avoid this tragedy, it is best to clearly stating a legal guardian instead of leaving this important decision to the courts.
Mistake #4: Making a Plan then Forgetting to Update It
Forgetting about an already existing estate plan is an invitation to trouble because your estate will likely go to your ex-spouse when you don’t update your will after a divorce or legal separation. This can cause a myriad of future legal problems for family members whom you wanted to include in the estate planning. The goal of estate planning is to make the division of assets as simple and problem-free as possible so it does not get entangled in the courts or cause unnecessary stress or emotional pain for your loved ones. Plus, it may be that tax laws are changed or revised and if so, this could affect your wishes with your estate.
Mistake #5: Forgetting to Plan for Incapacity
It’s not an easy scenario to think about giving power of attorney to someone but there is always a chance that you could become incapacitated. Planning for a situation where you are incapacitated, mentally or physically, will ensure that your wishes will be followed and the courts will proceed accordingly.
And while power of attorney carries its own risks, there are ways to avoid being vulnerable. Choose a person you trust implicitly and make sure that person is accountable for his actions in case of abuse of power.
The estate lawyers of Krause Donovan Estate Law Partners, LLC practice law in the areas of Probate, Wills, Estate Planning, and Trusts. We assist clients in and around Madison, Wisconsin with all matters related to estate planning, trusts, and probate matters. Our dedicated attorneys will even make house calls if you are unable to come to our office.
Contact our office by calling (608) 268-5751 to schedule a consultation or use our online contact form.