Creating an estate plan is important to ensure that your loved ones are taken care of when you die and your assets are distributed in the way that you want. Making mistakes when developing your estate plan can result in problems for your family or your property not being distributed as you intended. Here, we explain common mistakes that people sometimes make that you want to avoid.
Mistake #1: Not Having an Estate Plan
One of the most common mistakes is to have no estate plan. Not having a will or trust when you die can mean that your property is distributed under Virginia’s probate laws, which could result in your assets going to loved ones in a way you would not want. In addition, if you are unable to handle your finances or other decisions due to illnesses or old age, it can be harder for your spouse or children to take care of you if you do not have a living will or durable power of attorney.
Mistake #2: Not Listing Beneficiaries on Retirement Accounts and Life Insurance
Another error to avoid is not listing beneficiaries and contingent beneficiaries on your retirement accounts and life insurance policies. When you make this mistake, these assets will need to go through your will and trust rather than quickly pass to your beneficiaries when you die. If you do list beneficiaries, it is important to be clear on what happens if they die before you and to periodically review whom you have selected to be certain that your designation is in line with your current wishes.
Mistake #3: Planning Your Estate Around Specific Assets
Some people will have the intention of dividing their assets equally between their family members, but try to do so by giving specific assets to a named beneficiary in their will or trust. The problem with doing this is that the value of the property may change greatly before your death or you may not even own it when you die. This can result in a larger gift than you wanted to one family member or excluding family members from your estate plan entirely.
Mistake #4: Adding Children’s Names to Your Deed
Another common mistake you do not want to make is to add your children’s name to the deed for your home or other real estate to avoid the property being probated. When you do this, you are giving a gift to your children which could result in gift tax consequences for you and other tax consequences for your children. In addition, your children would be co-owners of your property, and their interest in it could be distributed to spouses in a divorce or creditors which your child owes debts to.
This error is even worse if you add minor children to your deed. You may need to obtain approval from the court if you decide to sell the property before they are 18 years old and could be required to give some of the proceeds to them as co-owners.
Mistake #5: Not Providing for Disabled Beneficiaries Properly
If a child, spouse, or other loved one is disabled and receiving Social Security disability benefits, you do not want to leave him assets in your will or trust that will jeopardize his right to these benefits. In this situation, it is crucial to create a special needs trust to provide additional assistance to your disabled loved one without making him ineligible for his disability payments.
Mistake #6: Trying to Create Your Estate Plan on Your Own
You may be tempted to use cookie-cutter forms that you can obtain on the Internet to save money on retaining an attorney. However, you can make mistakes when using these generic forms and may leave out documents you need to have a complete estate plan. It is best to retain an experienced estate planning attorney who can create an estate plan for you that meets your specific family needs.
Do you need to create an estate plan or update your current one? The skilled estate planning attorneys at Tavss Fletcher are here to help. Fill out our online form to schedule a free consultation today.