Estate planning may seem daunting, both from a legal and a personal standpoint. No one likes to think about what happens after they pass away, but it is nonetheless essential to be thorough and precise no matter which way you choose to protect your assets. In this brief article, the Arenson Law Group, PC team will share five estate planning pitfalls you should avoid.
Each tip we share comes from our estate planning attorney’s 30-plus years of experience helping clients protect their assets and distribute them as they wish upon their death. He continues to stay up to date with the latest laws and practices and provides advisory services to other attorneys in the Cedar Rapids area. If you have questions for him and his team, don’t hesitate to call our office at (319) 363-8199.
Not Updating Your Plan Frequently
Even as we age, our life situations and the circumstances of our families change. Your children or grandchildren may move or get married. An existing beneficiary could pass away unexpectedly, or there could be a new descendant or friend you’d like to include in your will or trust.
Estate lawyers generally recommend that people take time to review their will or trust every three years, regardless of whether anything has changed in their lives. If your plan is current, chances are better that the probate court will respect your wishes. This may help reduce the duration of any necessary proceedings.
Not Having Backup Beneficiaries or Power of Attorney
A sole beneficiary leaves your estate more vulnerable to lengthy proceedings. If something happens to them, the risk to your finances and assets increases exponentially. Moreover, if they had power of attorney over your care, you won’t have anyone to make important financial and medical decisions for you if you can’t make them yourself.
As an important “insurance policy,” you should have multiple “backup” beneficiaries in your will for all items and assets, and the same is true for your trusts. Even if you have an only child or do not have many living family members, you can still speak with your dearest friends about their role in your estate.
Being Too Specific in a Will
Just as our families and circumstances change throughout our lives, so do our assets. We can dispose of things if they break or sell them to others. Likewise, you might sell certain financial products such as stocks or investments in other markets. If you name an item in your will and it does not exist, there may be legal consequences when the will enters probate.
As you plan your will, make sure you think long-term. Ask yourself: “what assets will I have decades from now that I want to pass down?” If you say no to an item, perhaps consider leaving it under the “residuary estate” category. And don’t neglect to update your will frequently.
Not Accounting for Taxes
Estate taxes can get expensive if your estate meets the monetary thresholds. Even if your estate does not meet the current generous federal threshold, state taxes may still apply. Your beneficiaries may also face gift or transfer taxes on expensive assets or large sums of monetary inheritance.
Specific estate planning tools, such as irrevocable trusts, may have tax incentives that allow your beneficiaries access to more of what was yours. Your attorney can go over these options with you.
Not Planning at All
If you do not have a will or living trust, your estate will go into intestacy after you die. In other words, it is up to a probate court to decide where and to whom your assets go. The court will choose someone to administer the estate, usually a surviving spouse, child, or sibling, and that administrator is responsible for paying final expenses and debts. Once the administrator finishes, they must find any additional descendants. The court will then divide the remainder of the deceased’s assets.
The procedure may seem simple, but intestacy can take a long time, cost substantial legal fees, and result in unwanted heated arguments between family members. By taking the time now to create a will or trust, you will have the peace of mind you need to avoid intestacy and ensure your wishes are respected.
Contact Our Cedar Rapids Estate Planning Attorneys
We never know what the future holds. Don’t wait to begin planning your estate now to secure your finances and support those you leave behind when you pass on. With the Cedar Rapids estate planning attorneys of Arenson Law Group, PC on your side, you’ll have additional peace of mind. For a free initial consultation, contact us today at (319) 363-8199.