Do you have a spouse, kids, and other family members who mean the world to you? Do you possess valuable items such as property or financial investments? Then, you've probably considered leaving your assets to your loved ones when you die. Early estate planning is vital but be aware of these five common mistakes:
Not Having an Estate Plan
If you do not have an estate plan (or will), the State will decide how your assets are divided. Unfortunately, your family members may not agree with the State's decision. If you have kids under the age of 18, the court controls their inheritance, and only a percentage goes to them.
Solution: Hire an estate planning attorney to help you develop an estate plan.
Not Keeping Your Estate Plan Current
Believing that your plan is cast in stone is another common mistake. You may experience one or more of these situations after finalizing your plan:
major financial change
marriage
divorce
birth or adoption of a child
death of a beneficiary
Solution: Review your plan every few years and update as needed.
Not Planning for Incapacity
Do not rule out unexpected sicknesses. If you become seriously ill and are incapacitated, someone would have to conduct business on your behalf. Avoidance can result in one of these outcomes:
The court can appoint someone to manage your estate (although you have a will).
A Power of Attorney gives that person great control over your assets.
A Living Trust allows that person to conduct your business without court interference. The court only intervenes if they misuse their power.
Solution: Be proactive and designate someone you trust to make decisions on your behalf.
Not Naming a Guardian for Minor Children
Knowing who will raise your kids beforehand is an important decision you should make. Do not assume that a family member will automatically become their legal guardian. A judge normally appoints the person that he believes is most suitable.
Solution: If you have young kids, designate a guardian for them and include the name (s) in your plan.
Designating One Child as Joint Owner
Parents may sometimes choose one of their children to be a joint owner of their bank account or property. Having a child as a joint owner can be a disadvantage. They hold legal title and are not obligated to pay bills, pay for your funeral or even share the assets with siblings or loved ones.
Solution: Clearly outline in your plan how you would like your assets divided.
To avoid these pitfalls, it will be prudent if you contact an estate planning attorney like those at Linn Schisel & DeMarco Attorneys At Law. He will give you sound professional advice.
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5 November 2017
