Avoid Estate Planning Mistakes to Protect Your Loved Ones
No one likes to think about the end of his or her life; however, it is something that we all must face. In part, we do not want to think about the loved ones that we are leaving behind when it is our time say goodbye. It is because of your loved ones that you should think about estate planning. Estate planning protects your loved ones during a time when they are emotional and may not be thinking clearly. By taking steps now to ensure that your estate planning is up-to-date and includes all of the necessary estate planning tools, you can make it easier for your loved ones in the event of your premature death. Below are the most common estate planning mistakes and how you can avoid them.
Not having an estate plan or a final Will
Do you want the state deciding how to distribute your property upon your death? Intestate laws govern how a person’s assets will be distributed if the person dies without a properly executed Will. Rather than you making the decision as to how your property will be distributed, the state will divide your property among your legal heirs according to a pre-determined succession plan. Your family members will receive a percentage of your assets based on the laws of the state. Friends and unmarried partners will not receive anything from your estate. In most states, the individual’s spouse receives a large percentage of the estate with the remaining interest divided equally among the living children. If children are under the age of 18 years, the court will control their interest until they are of legal age (typically 18 years).
Three apparent estate planning mistakes result from not having a plan:
- Your final wishes will not be carried out – the state will be in control.
- Your children stand to inherit a substantial amount of money when they turn 18 years of age without any supervision as to how those funds are spent.
- Your spouse may need to liquidate assets in order to pay living expenses; however, your spouse must petition the court and obtain court permission in order to liquidate any assets held jointly with the minor children. The minor child’s funds must be placed in trust and cannot be used by your spouse to provide for your family.
Avoid this estate planning mistake by having a final Will that details your final wishes including how your property is to be distributed upon your death.
Failing to appoint a guardian for minor children.
If you die before your child reaches the age of 18 years, he or she must have a legal guardian. In the event that only one parent dies, the other parent becomes the child’s legal guardian. However, if both parents die without naming a guardian in a will, the court will name a guardian. This person may or may not be the person you wish to raise your child in your absence. To avoid this estate planning mistake, you must have a Will that appoints a legal guardian in the event of your death.
Relying on joint ownership to convey property.
Many people believe that by placing a co-owner on their property they can avoid probate. While this may work for most assets, it can create several problems as well. For example, the property becomes subject to the debts of the co-owner. If the co-owner is sued for an unpaid debt, his or her interest in your property may be attached to pay the debt. The property may also be included in the co-owner’s divorce or bankruptcy. It also does not take into account other family members who you may wish to receive an interest in the property after your death (the co-owner could claim the entire property as his or her own). You can easily avoid this estate planning mistake by utilizing one of the many estate planning tools such as a trust or a Will.
Failing to plan for incapacity.
Your final Will does not address issues of mental or physical incapacity. It is unfortunate but many people become mentally and/or physically incapacitated prior to their death. Some live for many years in this condition. This leaves the family to try to “guess” what their loved one would want to do with regard to healthcare and financial decisions. In most cases, the family must retain an attorney to petition the court to appoint a conservator to handle your finances and a guardian to make all other decisions for your. You can avoid this problem by using one of more of the estate planning tools that address physical and mental incapacity.
A power of attorney is a way that you can give someone the power to make financial decisions on your behalf even if you are unable to do so yourself. Your power of attorney can do anything in your name that you can do legally for yourself. Powers of attorney do not become void in the case of incapacity of the grantor. A trust is another tool that you may use to appoint a person to manage your finances if you are unable to do so for yourself. A trustee is held to a higher standard than a power of attorney and can be held accountable for misuse of his or her power.
A power of attorney or trustee does not have the ability to make healthcare decisions. By appointing a healthcare agent, you give that person the authority to make healthcare decisions on your behalf if you are unable to do so. Furthermore, you can also direct whether you want to be kept alive by artificial means including withholding medicine and/or nutrition. End of life decisions are very difficult on the family members who are fighting to keep their loved ones with them as long as possible. You can make your wishes known and release your loved ones of the burden of making those decisions by using estate planning tools regarding healthcare and end-of-life decisions.
Not updating your estate plan.
This is one of the biggest estate planning mistakes that is easily avoided. Events in our lives are constantly causes changes. Examples include the birth of a child or grandchild, divorce, marriage and the loss of a loved one. Each of these events can change your estate plan. To ensure that your estate planning tools are meeting your current needs, review your estate plan regularly and contact your attorney as soon as something changes. Maintaining and updating your estate plan will ensure that your final wishes are carried out in the event of death or incapacitation.
To create a personalized estate plan or to make certain your existing plan is up-to-date, accurately and legally reflecting the current state of your estate planning objectives, talk to estate planning attorneys at Estate Law Partners, LLC. Their experience and knowledge can help you have the peace of mind of knowing not only that you have a plan, but that your plan still creates exactly the legacy that you want. Contact Attorney Daniel J. Krause or Nelson W. Donovan today.
Reach us through our website or call our office at (608) 292-5185 to schedule your confidential, no obligation initial consultation