Helping Your Beneficiaries Avoid Estate Planning Nightmares
Without proper forethought, your estate plan could fall apart in ways you never expected. Some people make the mistake of writing a will instead of a trust, and their beneficiaries lose thousands of dollars in estate taxes after probate as a result. Others become incompetent after a catastrophic accident without designating power of attorney ahead of time. Some believe everything they have will automatically go to their spouse, but the government distributes it amongst other family members instead.
Due to common misconceptions about trusts and wills, many fail to plan the way they should. But probate (the result of improper planning) often fails to either fulfill your final wishes or care for your beneficiaries the way you do today.
Protect your loved ones and your legacy by avoiding these ten common estate planning mistakes:
- Choosing an inappropriate trustee. Your oldest child or the friend you’ve known the longest may not be the best choice for your trustee. When selecting a trustee, you need someone who is organized, responsible, and ethical. They need to be ready and willing to make difficult decisions, ultimately with the goal of carrying out your final wishes rather than selecting the most convenient choice.
- Failing to update your plan as circumstances change. Estate planning is a process, not a single, isolated task. If you start early, you have an advantage over most—but financial needs and relationships change over time, and a successful estate plan will reflect that.
- Forgetting about digital assets. Your photos, videos, files, and various accounts (including social media) must be managed as carefully as your physical assets, especially if they contain vital or private information. Your estate plan should include a comprehensive list of your accounts, media, and passwords, as well as instructions on how your social media should be handled after your death.
- Overlooking family pets. In legal matters, forgetting about your animal friends may be easy, even if you love them dearly. If you fail to include them in your estate planning, however, they may be taken to a shelter or euthanized. A skilled attorney can help you establish a pet trust in which you can set aside funds for your pet’s continued care.
- Failing to plan for the unexpected. Whether by injury or illness, you may at one point become incompetent and need someone else to make your healthcare or financial decisions. In other cases, a family member may pass away unexpectedly, or you may go through a divorce. A solid estate plan will include these contingencies, as well as designate power of attorney ahead of time.
- Failing to transfer your life insurance policy to a trust. A life insurance trust can help your beneficiaries avoid unnecessary estate taxes on your policy. Without this trust, most of the proceeds may go to the IRS, and your beneficiaries will need to wait months before seeing a pay-out.
- Putting a beneficiary’s name on the deed to your home. Sizable gifts are often subject to hefty taxes. If you establish an inheritance instead, your beneficiary can avoid losing an excessive portion of the gift in taxes.
- Relying on wills or failing to fund your living trust. Without a trust, your assets may need to be distributed through probate, which is a time-consuming process that often results in excessive taxes. A living trust typically solves this problem, but you will need to retitle your assets and clearly designate beneficiaries. Otherwise, your estate may not avoid probate.
- Completing your estate planning on your own. Many feel they can save money by using how-to guides or fill-in-the-blank services on the internet. But your situation is unique and requires a carefully devised strategy, and a qualified lawyer will help you create a foolproof estate plan with no details overlooked.
- Not planning at all. No one wants to spend more time than necessary contemplating their mortality. Some avoid it at all costs and pass away without any kind of estate plan in place. Others choose not to establish a will or trust because they worry about the financial costs, or they don’t want to decide which friend or family member gets which asset or responsibility. But putting in the work now will save your loved ones from months or even years of arguments and legal hassles.
Avoiding these common estate planning pitfalls requires honest communication, forethought, and regular updates. It is a serious investment—but if you want your final wishes to be properly implemented, careful planning will protect your beneficiaries and your legacy.
Contact a Seasoned Lawyer for Your Estate Planning Needs Today
At the Law Office of Robert J. Maher, PC, our attorney has helped hundreds of clients achieve their goals through personalized legal support and representation. We understand how important it is that your estate plan addresses every potential obstacle, and our attorneys in New York are more than prepared to care for your estate with unparalleled attention to detail.To meet the needs of our clients, we schedule same-day and weekend appointments. Call (646) 681-1977 today to get started.