“Sometimes, people attempt to make an estate plan without consulting legal and financial professionals.”
We’re all looking for a deal. No one wants to pay retail. After all, that’s why there are so many big box hardware stores and YouTube videos that try to teach you how to do things for yourself. You save the expense of hiring a professional to do the job for you. Many folks think the same can be said for estate planning.
They may have a broad idea of estate planning and are intent on doing it for themselves without paying for legal services. However, this usually is a bad idea. A teacher or a firefighter won’t have the background and knowledge required to draft the documents that cover their specific circumstances and the requirements of current probate and tax laws.
The Sabetha Herald notes in its recent article, “Estate Planning pitfalls,” that a DIY-er can make many mistakes. The article points out several of them.
The first issue is having an outdated estate plan, especially a will that has not be updated to reflect that your children are now married and have children of their own. Perhaps you’ve divorced and remarried. Review your estate plan regularly, at least every four years. If you want to revise your will, you can’t just cross out a part of an old will or simply add information and initial the document. You need to go through the same validation process as a new will.
Another mistake is not coordinating a will and a trust. They should be aligned, so your wishes will be carried out. Along the same lines, many people don’t title their assets correctly and don’t update beneficiary designations on IRAs, 401(k)s, company plans and other accounts.
Failing to name successor or contingent beneficiaries is a common mistake. If you name just one beneficiary on an account and he or she dies, then there’d be no successor to receive the account’s assets. The assets could then go to a person you didn’t want to have them, or they could end up in your probate estate.
A major mistake is not designating an individual to make your healthcare decisions, in the event you become incapacitated. These are known as living wills, medical directives, health care proxies or advance health care directives. A related mistake is relying on an outdated financial power of attorney. Your circumstances or your relationship with that person may have changed, since you signed the document.
Many people don’t think about Medicaid. They wait too long to plan for the costs of nursing home or other long-term care, and then try to apply for Medicaid. This should be addressed long before a person nears the time when such care may be needed.
Finally, many people think that estate taxes won’t apply to them. However, many states have their own estate taxes with lower thresholds than the federal estate tax.
Consult with an experienced estate planning attorney to minimize state taxes, ensure that your assets are titled correctly and to be certain you have a complete estate plan in place for your heirs.
Reference: Sabetha (KS) Herald (June 2, 2017) “Estate Planning pitfalls”