We are a nation of do-it-yourselfers. With the many helpful videos online, people try their hands on everything from kitchen plumbing to farming. There are many instances where DIY works well, and it’s rewarding to look at your handiwork and say “I did that!” But the same cannot be said for estate planning.
People may have a broad idea of estate planning and feel that they can do it for themselves without paying for legal services. Without the background and knowledge required to draft the documents that cover specific circumstances and the requirements of current probate and tax laws, a DIY estate plan is a recipe for disaster.
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The first issue is having an outdated estate plan, especially a will that has not be updated to reflect that your children are now married and have children of their own.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 A related mistake is relying on an outdated financial power of attorney.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.
Because the federal estate tax exemptions are so high, most people don’t worry about estate taxes. However, state estate taxes have far lower thresholds, and most people do have to pay them.
To ensure that you have an estate plan that will achieve your wishes, speak with an experienced estate planning attorney. They will be able to help you minimize your tax liability, make sure that your assets are distributed in the way that you want and save your heirs from having to devote time and resources to fix the unintended consequences of a homemade will.
The attorneys of Legacy Counsellors, P.C. practice only estate planning. This means that you are creating a well-tested plan for traditional estate planning, Medicaid planning, tax planning, and asset protection. Do not leave your heirs a legal disaster, plan to leave your heirs a legacy.
Reference: Sabetha (KS) Herald (June 2, 2017) “Estate Planning pitfalls”