Common Estate Planning MistakesNovember 24, 2021
As people age, their priorities change—many older people start thinking about the legacy they’ll leave behind. Most people want to ensure that everything they’ve worked for will go where they want it and that they won’t leave behind hitches or snags for their loved ones to untangle. For this reason, it’s crucial that you know how to properly create an estate plan and avoid making any mistakes.
5 Common Estate Planning Mistakes People Commit
1. They Sign Estate Plans They Don’t Understand
According to Business Insider, 91 percent of people don’t read the legal terms and conditions of agreements they sign. If you don’t understand the legal document in front of you, don’t sign it—you might unintentionally agree to things that are against your wishes.
Your best course of action is speaking with an estate planning attorney and having them explain what the estate document contains. If your estate plan does not accomplish what you want it to, or if you unwittingly sign away portions of your assets, your heirs might find it challenging to claim what you intended for them in the first place.
2. They Don’t Update Their Estate Plan
You need to reexamine your will and estate plan every five years or when you have major life events. Marriage, births of children or grandchildren, divorce, and the death of a spouse or loved one are all good reasons to revisit your plan. Changes to your net worth, moving to a new residence, or a job loss are also good reasons for an update.
If you don’t revise your estate plan regularly, you might miss out on including people or causes whom you’d want to benefit from your estate. Conversely, personal relationships or affiliations could end. If your plan fails to reflect these new realities, your assets could go to the wrong people.
3. They Do Not Create Trusts
In Pennsylvania, a living trust enables you to bypass probate—it lets you include assets which can be distributed even immediately upon your death. A trust also protects you and your assets should you become incapable of handling personal affairs while alive.
It’s easy to fund a trust for certain property types, but it is more complex for others. Your estate planning lawyer can help you through the process and show you the best practices.
4. They Do Not Create a Power of Attorney
If you become incapacitated because of medical issues, a power of attorney will let an agent make decisions on your behalf. Creating separate powers of attorney—one for financial decisions and another for medical ones—will ensure that you cover all typical scenarios that could arise if you become permanently unable to make decisions.
At times, you might have to revise your powers of attorney as well. For example, if the person you list as your power of attorney dies or develops a cognitive disorder, you’d have to make changes. You need to choose someone who is tough and can make financial and medical decisions for someone else; consulting an estate attorney is your best first step.
5. They Do Not Coordinate Trusts and Retirement Plans
If you want to avoid over-taxation during estate planning, you must create a see-through trust, especially if you want to name your trust as the beneficiary of your retirement plan. This process will be much more efficient in the hands of an estate planning attorney.
Work With an Estate Planning Lawyer to Avoid Any Mistakes
Many people underestimate how complicated estate planning can get. There are various consequences when you make a mistake during planning. For example, it could be impossible for you to retire the way you want to, or your will might make your inheritance wishes unclear. Having a skilled lawyer to consult will help you create a plan suited to your circumstances.
DaleyZucker LLC are your estate planning lawyers in Pennsylvania. We have been serving the Lemoyne, Harrisburg, and Carlisle, PA areas for more than 50 years and have helped dozens of families with the proper planning and administration of their loved ones’ estate. Book a consultation today or contact us for other inquiries!