4 Common Mistakes People Make During the Estate Planning Process

It is important for a person and family to plan for the future. By creating an estate plan, a person can not only make decisions about how ownership of their assets will be handled after their death, but they can also ensure that they and their loved ones will have the necessary financial resources and that other needs will be met throughout their lifetime. However, it is also important to follow the correct procedures during the estate planning process. There are a variety of mistakes that people commonly make that can affect them and their beneficiaries, resulting in financial losses or unnecessary complications. Some of these mistakes include procrastinating, naming a single beneficiary for certain assets, failing to address long-term care, and handling the ownership of assets improperly. 

1. Procrastinating – Thinking about death is never pleasant, so it is understandable if a person puts off decisions about estate planning, especially if they expect to live for many more years. However, death can happen unexpectedly, and without an estate plan in place, a person’s family will likely struggle to determine what they would have wanted and handle matters related to their assets. It is also important to keep an estate plan updated, especially after major changes in a person’s life, such as a move to a new state, a financial windfall, or the birth or adoption of a child. Failure to ensure that an estate plan reflects a person’s current situation may lead to uncertainty about how to handle multiple types of issues when the need arises.
2. Naming a single beneficiary for certain assets – A person may plan for certain assets to go to different family members or loved ones, so they may include language in their will naming one family member as the beneficiary of a piece of property. However, it is also important to have a backup plan. If a beneficiary dies before they can inherit assets, and there is no secondary beneficiary named, this will create uncertainty about who will receive certain assets.
3. Failing to address long-term care – In addition to addressing ownership of a person’s assets after their death, an estate plan may also provide for their needs during their lifetime. Failure to make arrangements for medical care or detail a person’s wishes about the treatment they do or do not want to receive in certain situations can create a great deal of uncertainty for a family as the person gets closer to the end of their life. To address these issues, a person may use a living trust to ensure that they will have the proper financial resources, and powers of attorney or other advance medical directives may be used to detail their wishes regarding end-of-life care.
4. Handling ownership of assets improperly – In some cases, a person may begin taking steps to transfer ownership of property before their death, such as by making their child the co-owner of their home. However, doing so can have unexpected tax consequences, and gift taxes or capital gains taxes may apply in certain situations. To ensure that assets can be passed to beneficiaries while minimizing financial losses, a family will want to consult with an estate planning attorney to determine their best options.

Contact a Naperville Estate Planning Lawyer

As you plan for the future, you will want to take steps to create a comprehensive estate plan that will meet the needs of you and your family. By avoiding the mistakes detailed above and working with a lawyer to determine your best options, you can make sure you will be prepared for whatever may happen during the rest of your life, and you can provide for your loved ones after you are gone. To learn how the Gierach Law Firm can help you put the proper plans in place, contact our Illinois estate planning attorneys at 630-756-1160.

Sources:

Kiplinger

Mass Mutual

Forbes