When starting to plan your estate, there are a myriad of decisions to be analyzed and made. There are so many, in fact, that it is difficult to create your own estate plan without running into some sort of error or overlooked clause. While the only way to be sure that your estate plan is airtight is to enlist the help and expertise of an estate planning attorney, there are a few common estate planning mistakes that you can look out for.
The first common mistake: Not preparing for incapacity. Most people assume that the most important part of an estate plan is to address how assets will be divided among heirs — and in truth it is one of the most important, but most people also forget to plan for incapacity. A good estate plan should spend an equal amount of time addressing how your estate should be handled and how you are to be cared for if you are no longer able to manage it yourself. The “who gets what” provisions are certainly important, but there are other aspects that need equal attention.
Another common mistake is assuming that their children, either children or adults, don’t need any sort of inheritance protection protocols put in place. Many assume that the best way to avoid bureaucratic or financial entanglements is to just give their heirs the lump sum of their inheritance. This, however, leaves the inheritance wide open to the divorcing spouses, creditors, and the wims of 18 year olds heirs. It is possible to protect your child’s inheritance with very few strings attached. A trust plan can be created that will allow your child to become his own trustee of his share. This will provide almost unlimited access to the money, but it also allows the child to add an independent co-trustee to their share of the estate in case of problems. This will ensure that the money will still be considered part of the original estate – off limits to creditors or divorcing spouses.
“Blended family relationships” often become a tricky obstacle in estate planning. There are tons of scenarios everyday involving dealing with communication and cooperation between surviving spouses from a second (or third, etc.) marriage and children from the first (or second, etc) marriage. No matter how much you love and trust your children and your new spouse, you must remember that the prospect of money often causes even the best people to be self-serving. Enacting a solid trust plan that specifically covers remarriage restrictions and other protections will ensure minimal dispute, and overlooking these protections is our third common mistake.
The final common estate planning mistake is much less tangible than the rest: thinking of your estate planning as an “event” rather than as a “process.” Your estate planning is a process – one that takes a long time and should be gradually established. Within the time spent estate planning, laws will have changed, assets with develop, and your personal relationships with evolve. These must all be reflected in your estate planning choices. A common mistake is not reviewing your estate plan on a regular basis to ensure that no changes need to be made. Make sure not to forget to review and revise regularly!
The estate planning process is a complicated road that is best navigated with the help of an experienced estate planning attorney. If you have any questions about your current estate plan, or wish to begin the process of creating one, contact Estate Planning Attorney Adam Tobin.