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Horizon Elder Law & Estate Planning Blog

Wednesday, May 16, 2018

7 Deadly Sins of Estate Planning

Wealthy individuals are not the only people who need an estate plan. Regardless of your financial situation, you should have a comprehensive estate plan to protect your family, your assets, and yourself. An estate plan includes much more than a will. A California estate planning lawyer utilizes a variety of tools to ensure your wishes are carried out after your death, you have a plan for incapacitation, you maintain control over health care decisions, and your loved ones are protected even after you are no longer able to take care of them.

Unfortunately, some individuals fail to take steps to develop a comprehensive estate plan. Some people may make mistakes that can have costly and devastating consequences for themselves and their loved ones. Below are seven mistakes that a California estate planning lawyer can help you avoid as you plan for your future.

1. Failing to Review and Update Your Estate Plan

One of the deadly sins of estate planning is failing to review your plan on a regular basis. Your estate plan should be reviewed and updated whenever you have a major life event such as a divorce, marriage, birth of a child, death of an heir, or purchase of a major asset or business interest. Even if you do not have a major life event, it is prudent to review your estate plan with your California estate planning lawyer each year to ensure that your plan still meets your needs and accomplishes your goals.

2. Failing to Update Beneficiary Designations

Some property may pass directly to beneficiaries instead of going through probate, such as life insurance policies, retirement accounts, and POD accounts. Failing to review and update beneficiaries after major life events is also a huge mistake.  For instance, if your spouse is the beneficiary of your life insurance and your retirement, he or she may inherit these assets even though you are divorced if you failed to change the beneficiary designation after your divorce.

3. Not Taking Advantage of Powers of Attorney

By using a power of attorney, you may avoid a court-appointed conservator or guardian if you become incapacitated or cannot manage your finances and care for any reason. You should discuss the types of POAs you need, including a financial POA and a health care POA with your estate planner.

4. Failing to Fund a Revocable Trust

A revocable trust or living trust is a beneficial tool used in estate planning.  The assets in the revocable trust can pass directly to beneficiaries without the necessity of going through probate. This feature can help with disability planning and in the reduction of estate taxes. However, if you fail to transfer the assets to the trust, you lose the benefit of a revocable trust. Discuss the steps you should take to transfer assets into the trust with your estate planner.

5. Reviewing Assets and Ownership of Assets

You may own assets individually or with other people. To ensure that the ownership of your assets continues to meet your goals and needs, you should review asset ownership routinely. In addition, tax laws and estate laws may change that could change how an asset should be held. Your California estate planning attorney can review the ownership interest in assets to ensure that the structure of ownership provides the best advantage for you and your heirs.

6. Failing to Coordinate Your Estate Plan with Your Retirement Plan

Your estate plan should coordinate with your retirement plan. Failing to develop an estate plan that is closely tied to your retirement plan could jeopardize your retirement funds and cause problems for your heirs. Working with an estate planner can avoid problems that may result in costly mistakes such as failing to coordinate the use of trusts with your retirement plan.

7. Not Asking Questions So That You Understand Your Estate Plan

Estate planning does not have to be a complicated procedure; however, for some individuals, an estate plan may include intricate documents necessary to accomplish the person’s goals. It is the job of your California estate planning attorney to ensure you understand the plan and what you must do to implement various aspects of the plan. However, it is your responsibility to ask questions whenever you do not understand what your lawyer is explaining to you. You should ask as many questions as necessary until you understand every element of your estate plan fully.

Do You Have Estate Planning Questions?

Contact the skilled estate-planning attorneys at Horizon Law to discuss how we can help you avoid estate planning mistakes.

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