A comprehensive estate plan can help your loved ones to avoid a litany of stresses and court procedures after your death.
Therefore, it is important to prioritize detailed, high-quality estate planning, regardless of the stage of life you’re in.
Unfortunately, many people are unfamiliar with the various tasks and strategies associated with estate planning—and this makes it more likely that they will make mistakes. Below is an overview of five of the most common estate planning mistakes (and how to avoid them):
1. Not having any form of estate plan
The biggest mistake a person can make regarding an estate plan is not having one at all. Many people feel they are too young to need to worry about it, or that they do not have a valuable enough estate to make it worthwhile. The unfortunate reality is that none of us can escape death, and we must be prepared for that eventuality and plan our estates if we want to have any control over what happens to our assets and property after we are gone.
2. Not updating a will after changes in life circumstances
A last will and testament is not something you can just establish and then forget about. It is important to regularly revisit your will and determine if you need to make any changes. There are certain major life changes that necessitate updates to a will, including births of children, deaths of loved ones, divorces, marriages, purchases or sales of family businesses and the acquisition of real estate.
3. Not planning for disability or illness
If you should get into an accident or find yourself unexpectedly disabled, you need to have medical instructions in place to ensure you get the type of care you desire. Estate planning tools such as healthcare power of attorney and a living will allow you to provide important information regarding your wishes if you become incapacitated and are unable to make and communicate these decisions yourself. The last thing you want is to be left in a situation where your loved ones must guess as to your preferences in a given situation.
4. Not attempting to minimize your estate tax responsibility
If the value of your estate is above or close to the estate tax exemption limit ($5.49 million for individuals, $10.9 million for couples), you should do everything you can to minimize that tax impact to help your beneficiaries inherit as much as possible. You can make gifts to your loved ones during your lifetime, set up irrevocable (tax-proof) trusts or give to charities—these are just a few of the many strategies that may help you reduce the taxable value of your estate and keep as much value in place as possible for your beneficiaries.
5. Choosing the wrong executor
Your spouse or your oldest child might not be the best choice to be your executor. You want someone who will take the job’s duties seriously, will be organized and responsible throughout the entire process and will be able to deal with any of the potential conflicts that could arise among friends and family members. In some cases, the right person might not even be related to you.
To avoid these and other common estate planning mistakes, speak with an experienced New York estate planning lawyer at Lissner & Lissner, LLP.