10 Estate Planning Mistakes to Avoid

10 Estate Planning Mistakes to Avoid If you want to start preparing for your future, make sure you know what common estate planning mistakes to avoid. Working with an experienced estate planning law firm that you trust is key, but there are other steps you should take as well. Here are some of the detrimental mistakes to look out for.

1. Not Making Estate Plan Updates

If you’ve created your estate plan but you’re failing to appropriately update your documents, you’re only making things more difficult for your loved ones down the line. All too often, people leave their estate plans outdated and end up with a long list of problems. You may have beneficiaries who have already passed away (or you no longer want to be included like an ex), you may have new children or grandchildren that are left out, you may have gotten rid of assets or accounts without removing them from your plan, or, worse, gotten new assets or accounts without including them in your plan. Even changes in public policy can affect your estate planning, so it’s vital that you regularly review and update all your documents.

2. Requiring a Home Sale

Some people require their home to be sold once they die to simplify asset division among beneficiaries. However, this could actually create more problems. If your house passes through to beneficiaries, it could be protected from creditors. But, if the property is sold, the same protections may not apply.

3. Not Accounting for Long-Term Care

Unfortunately, the vast majority of senior citizens end up needing full-time care later in life. Long-term care is most likely more expensive than your current lifestyle. Because of this, your estate plan should definitely include some planning for long-term care and even disability.

10 Estate Planning Mistakes to Avoid4. Failing to Account for Beneficiaries Receiving Government Benefits

If you have any beneficiaries who are receiving government benefits such as disability income, keep in mind they will have certain asset limits. You don’t want your inheritance to disqualify them from benefits if it isn’t in their best interest. It can often take a great deal of time and effort to reapply and qualify for those benefits, which only makes it more stressful on your loved one after your passing. Make sure you talk to your attorney about this to plan accordingly.

5. Getting Too Specific

While being specific in your estate plan is good at times, it’s an estate planning mistake in other circumstances. Things like sports tickets that you aren’t likely to maintain forever probably don’t need to have a place in your estate plan. Additionally, being overly specific in your trust can put limitations on beneficiaries that won’t make sense in the future and may lead to problems. If you still want to include some specific wishes, you can convey them in a separate document that isn’t legally binding and won’t create issues for your loved ones.

6. Designating the Wrong Fiduciary

Your fiduciary has a major responsibility on their shoulders. Many think that a family member such as their oldest child is the obvious choice, but they may not be appropriately qualified. You may want to opt for a professional fiduciary instead.

7. Ignoring Tax Liabilities

Estate tax liability can be a problem if you have a large estate. Make sure you know about your state’s laws regarding estate taxes and keep those limits in mind when creating your will or trust. Mindful tax planning while creating your estate plan can help your loved ones get the greatest benefit from your estate.

8. Not Funding Your Trust

For your trust to actually benefit your beneficiaries, you need to make sure it’s properly funded. This means that after creating the trust, you transfer the titles of assets to the trust. Also, when you get new assets or accounts, those would need to be titled in the name of the trust to be included. Anything that isn’t in your trust at the time of your passing will have to go to probate.

10 Estate Planning Mistakes to Avoid 9. Storing Estate Plan in Security Deposit Box

Contrary to what you might think, putting your estate plan in a security deposit box could actually complicate matters for your heirs after you’re gone. The complication comes in the fact that banks typically only allow the owner of the box to access it, and it usually requires a physical key. If your loved ones don’t have the key and aren’t granted access by the bank, they cannot retrieve your estate plan. Instead, buy a fireproof safe for your plan and let trusted loved ones know of its location and how to open it.

10. Not Accounting for Digital Assets

Don’t forget about your digital assets including online banking info, the photos and videos you have saved digitally, and even your social media accounts. This is an often overlooked but incredibly important step in your estate planning for two reasons. First, you likely receive most of your bills and bank statements electronically instead of by mail. Your loved ones will need access to that information to determine what accounts must be handled. Second, all of the memories you have in digital photos and videos will die with you unless you make a plan for them. Our world continues to move more to the digital realm, which means family photos are getting lost because the digital ones can’t be passed down as easily as the old boxes of printed photos, albums, and scrapbooks. Every estate plan that we do includes an inventory of digital assets so that we can create a digital asset trust to handle your memories and your important account information.

Talk to Dana and Associates About All Your Estate Planning Needs

With such a thin margin for error, it’s vital that you seek the expertise of an estate planning law firm. For a smooth estate planning process, seek out Dana and Associates in Mesa, Arizona. We’ll make sure you avoid these common estate planning mistakes. Schedule a virtual meeting to get started!