Top Estate Planning Mistakes to Avoid in 2020
by Mashum Mollah Real Estate Published on: 08 December 2016 Last Updated on: 25 September 2024
As we’re ending the end of 2016, it’s a good time to revisit your estate plans and make sure everything is in line the way you want it. Most people have a set-and-forget it approaches estate planning, but unfortunately, that’s not always best because your plans should change along with the changes in your life.
As we near the start of a new year, whether you’re starting from scratch with your estate plans, or you just want to make sure everything is still appropriate for your current situation, the following are some mistakes you should certainly avoid.
These estate planning mistakes may be detrimental, but they’re also common, so make sure you’re not guilty of any of them.
An Outdated Will:
As mentioned above, even people with thorough estate plans tend to make one big mistake, and that’s not updating everything accordingly.
For example, what if you made your will when you were married, and your primary goal at that point was to protect your spouse if you passed away, but now you’re divorced? You need to change your will to reflect that, as well as many other possible changes, such as different assets, more children or grandchildren, or changes in your business.
Not Including Long-Term Disability Planning:
You may think sound estate planning is all about protecting your spouse after your death as well as the rest of your family, but that’s not all there is to it. You also need to plan for events in your life that could impact your finances and your personal life.
For example, if you become incapacitated temporarily or experience long-term disability or the need for long-term care, does your estate plan cover these areas? Have you dictated who will handle your care and medical decisions as well as your finances?
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Failing to Consider Tax Consequences:
Taxes are front and center in the media right now, as there is a new U.S. President-elect who campaigned on across-the-board tax cuts. Whether or not these cuts come to fruition, you should be giving taxes serious consideration during your estate planning in 2017.
There are a variety of tax consequences and different tax situations that can apply to estates and there are things you can do to reduce tax burdens before your free tax filing of 2016 on your estate and our loved one, such as making gifts. It’s important that when you’re creating your estate plan you consider taxes and other financial obligations that your heirs may have to take on.
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Creating the Possibility for Discord:
When you’re thinking about your estate, particularly if you have several children, you probably want to be fair to everyone, but that quest for fairness can actually lead to problems down the road, and your children may end up spending their inheritance fighting it out in court.
For example, parents will often leave all of their children equal shares of their home, and that is just a breeding ground for potential disagreement.
When you’re making plans, ensure that in your quest for the equity you’re not creating problems in the family dynamic.
These certainly aren’t all the situations that can be seen as mistakes in estate planning, but they’re some of the most common, and they’re some that you should keep an eye out for as you work on your plans in the new year.
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