Avoid these common estate planning errors

Avoid these common estate planning errors

| Dec 21, 2020 | Estate Planning |

If you’ve decided that it’s time to execute a plan to protect your assets, put instructions regarding health care decisions in writing and provide an inheritance for your loved ones, then you’re in a distinct category apart from those in New York and beyond who won’t even discuss their own mortality. Such people don’t understand what a valuable tool estate planning can be.

As you execute your estate plan, you can incorporate various documents or terms that meet your specific needs and help you accomplish your goals. A word of caution is fitting, however, because there are certain mistakes that you’ll want to avoid in order to make your plan as solid and useful as it can be. It’s a good idea to discuss the estate planning process ahead of time with someone who is well-versed in such matters.

Do not sign anything you don’t understand

Regardless of the size of your estate, you’ll be signing documents to make your plan official and legally binding. Even if you dislike reading legal jargon or scrutinizing fine print, it’s imperative that you fully understand every word of a document before adding your signature. Signing something you don’t understand can have serious, negative repercussions.

Estate plans should be reviewed and updated

After you navigate the estate planning process the first time, it’s a mistake to think that it’s complete and you don’t have to ever think about it or worry about it anymore. One of the most common errors New York estate owners and others make is failing to update beneficiary designations. Perhaps you designated your spouse to inherit assets from your retirement fund but have since filed for divorce.

Maybe there have been births in your family that would prompt you to update your estate plan because you don’t want to leave the new family member out of your inheritance. The best way to avoid this type of mistake is to periodically review your plan to check if any changes, deletions or additions are necessary.

Don’t forget to fund a revocable trust

You may have created a trust to help your family members avoid probate taxes. If so, you’ll want to make sure you remember to fund the trust, especially concerning real estate or vehicle registration. You must change the deed or registration form to reflect ownership transfer of the asset to the trust. Many people take the proper steps to create revocable trusts but fail to fund them.

Did you name powers of attorney?

The older you get, the likelier it might be that you would implement a power of attorney document before you die. If you were in your 20s or 30s when you executed your estate plan, you might have overlooked the need for signing a financial or medical power of attorney. If you did designate people to carry out these responsibilities, it’s imperative that you update your documents as needed.

If you become incapacitated, any financial or medical power of attorney you signed is in effect. Not doing so may cause complications, such as if you designated power of attorney to someone who has since passed away. Many estate owners ask experienced estate planning attorneys to review their plans and make recommendations on which documents to include or which updates to make in an existing plan.