5 Common Estate Planning Mistakes to Avoid

Estate planning is an important process that allows individuals and families to protect their assets and ensure a smooth transfer of wealth to loved ones after a person passes away. However, many people make common mistakes during the estate planning process that can lead to unintended consequences and legal challenges for their heirs. These mistakes include:

Failing to Create an Estate Plan

One of the biggest estate planning mistakes is simply not having a plan in place. Many people assume that they do not need an estate plan because they are young and healthy or because their intentions for their money and assets are clear. However, everyone should have an estate plan, regardless of their age and the extent of their assets.

An effective estate plan helps ensure that a person’s wishes will be carried out correctly after their death, and it can also ensure that their needs will be met throughout the rest of their lifetime. An estate plan may include documents such as a will, trusts, power of attorney, and living will. These documents provide instructions regarding the distribution of assets, and they can appoint someone to make financial and/or medical decisions on a person’s behalf if they become incapacitated, while also outlining end-of-life medical preferences.

If something happens unexpectedly when a person does not have an estate plan in place, this could result in chaos for family members who may not have clear guidance on how to handle certain matters. By addressing these concerns ahead of time, a person can make sure their wishes will be followed and their needs will be met.

Not Updating an Estate Plan Regularly

An outdated estate plan can be just as bad as not having a plan at all. Life circumstances change over time—couples get married or divorced, children join a family through birth or adoption, loved ones pass away, and financial situations fluctuate—and all these changes may require updates to an estate plan.

To ensure that the distribution of assets aligns with a person’s current intentions, it is important to take the time to regularly review and update an estate plan. It is recommended to revisit an estate plan every few years or whenever there is a major life event.

Ignoring Tax Consequences

Estate planning involves more than just deciding who will inherit assets. It also includes considerations of tax consequences, especially for those who have significant wealth. Failing to account for potential taxes can greatly reduce the value of an estate and limit a family’s ability to make use of the assets left to them.

An experienced estate planning attorney can help a family navigate complex tax laws and minimize tax liabilities so that more assets will be preserved for a person’s beneficiaries. At the Gierach Law Firm, we may recommend strategies such as establishing asset protection trusts or leveraging annual gift exclusions to protect wealth from unnecessary taxation.

Neglecting Digital Assets

In today’s digital age, it is important not to overlook a person’s online presence when creating an estate plan. Many people forget to address their digital assets—email accounts, social media profiles, online bank accounts, etc.—in their estate plans.

To ensure that valuable assets are not lost forever or accessed by unauthorized individuals after a person’s death, provisions can be included in an estate plan regarding access to digital accounts and ownership of digital assets. A person may want to consider appointing a trusted individual as a digital executor who will handle all matters related to their online presence according to their wishes.

Not Seeking Professional Help

Estate planning is a complex area of law with many intricate details that can easily be missed by someone who does not have the proper knowledge and experience. While DIY estate planning options might seem appealing due to cost savings, they often come with significant risks and drawbacks.

A qualified estate planning attorney has the knowledge needed to create comprehensive plans tailored specifically for each client’s unique circumstances and goals. At the Gierach Law Firm, we stay up-to-date on state-specific laws governing estates, and we can help families prevent costly mistakes while ensuring that they meet all of their legal requirements.

Contact an Experienced Naperville Estate Planning Attorney

Do not risk making costly mistakes with something as important as your estate plan. By consulting with an experienced estate planning attorney, you can avoid potential pitfalls and ensure that your wishes will be properly carried out both during your life and after your death. 

If you need assistance creating or updating your estate plan in Illinois, the Gierach Law Firm is here to help. With our knowledge of estate planning law and our deep understanding of the unique needs of individuals and families who own significant assets, we can guide you through every step of the process. Contact our DuPage County estate planning lawyer today at 630-756-1160 to schedule a consultation and get started on protecting your family’s future.

Sources:

https://blog.massmutual.com/planning/estate-planning-big-mistakes

https://www.aarp.org/money/investing/info-2023/estate-plan-mistakes.html

https://www.fool.com/retirement/2023/08/03/5-most-common-estate-planning-mistakes-and-how-to/