What Are the Most Common Estate Planning Mistakes?
Estate planning is not a task for a layperson. Anyone who wishes to get their estate in order for their loved ones while saving money on taxes needs professional assistance. These common mistakes can cost your spouse, children and business partners money and time, as well as creating inflated tax bills, problems and arguments when attempting to carry out your intentions.
Mistake #1: My will is enough to protect me.
If you already have a will, probably drafted many years ago, do not think this is a document that can be put in a drawer and forgotten about completely. If you own assets that you bought or sold since the will was drafted, if you changed a business structure, if you got married, if you had additional children; all these life events may necessitate updating the will. Further, a will names a guardian for minor children, which should be reviewed every few years.
You can only make changes to a testamentary will with a new will or a codicil, which is an amendment to a will that is executed in the same manner as the original. Do not make hand changes or attempt to draft a will amendment without an attorney.
Mistake #2: I’m not super wealthy, so I don’t need a trust.
Many people believe that creating a trust is only for those with vast wealth. However, a will in itself will not provide tax savings or pass assets directly to your beneficiaries. Many types of trusts can provide tax shelters and tax savings, and trust assets are not part of the probate estate. If an asset does not have to go through the probate process, your beneficiaries can access the money or property directly. This will save time and probate court administration fees. Trusts are commonly used to pass on real estate and life insurance policies for people of average means, and trusts can be used to protect money for children before they are mature enough to handle cash sums.
Mistake #3: I don’t need to review my trusts and estate plans.
Another common mistake people make is that they think their work is done once they set up a trust and estate plan. However, changes in the law, your life and the lives of people involved in your trust may require you to make updates and changes to keep up with your intentions. To ensure you receive the best advice and legal protections, always have your entire estate plan reviewed every few years to see if any legal or personal updates necessitate a change.
Mistake #4: I don’t want to think about a living will or powers of attorney.
One of the worst mistakes a person can make is to avoid the discussion regarding living wills and powers of attorney. In the event a person becomes seriously ill or is involved in an accident, failure to have these documents in place will have great consequences to family members and business associates. You must discuss your wishes for extended care in the event you become incapacitated. Without a living will and powers of attorney to ensure your health care and finances can be handled immediately and competently, family members and business associates can be easily overcome with grief, anxiety and arguments. These problems can be avoided or eased when a person has a living will and powers of attorney in place to plan for the unexpected.
Finding the Right Advice for Estate Planning in Des Plaines and Hoffman Estates
If you’re considering creating a plan for your estate, you’ll need an attorney who cares about your wishes and knows how to help you design an estate plan that will serve your beneficiaries in the way you intended. At Pluymert, MacDonald, Hargrove & Lee, Ltd., our Hoffman Estates lawyers care about serving our clients with excellent estate planning. Follow our Des Plaines attorneys’ newsletter or contact us today for more information.