Planning your estate is an extremely important process and should be taken very seriously in order to avoid hassles or any extra delay that could come with passing your estate through probate or otherwise transferring assets to loved ones and friends. With proper planning and attention to detail, most folks can avoid some of the most common estate planning mistakes and avoid any costly and prolonged probate process.
One of the most common estate planning mistakes is adding a friend or younger family member’s name to a joint account as a matter of practicality to make accessing the deceased’s bank account after passing away to pay for funeral costs and other bills. While this may seem like a good idea to some, the reality is that this can create confusion over the deceased’s intentions and may complicate probate. A better alternative is to give a trusted individual power of attorney to make financial decisions if incapacitated and a prepay for funeral expenses.
Instead of leaving assets to heirs in a will outright, individuals should consider setting up a trust for these assets to pass onto upon the grantor’s death. This way the heir does not take on unwanted wealth to his or her name and complicate tax considerations or Medicaid planning. This can also shield the assets from creditors who may go after the wealth to recoup debts incurred by the heir.
Updating beneficiary designations is another common estate planning mistake that can prevent assets from transferring to the proper party. Often times, individuals create a single will in their lifetime and fail to update it when major life changes occur, such as having grandchildren, going through a divorce, or remarrying. Without the updates, the estate could essentially be intestat, or without a proper will, and a legal fight could ensue in a Surrogate’s Court over the estate.
Perhaps the biggest estate planning mistake is to have no estate plan at all. While there are legal mechanism to ensure that surviving spouses and children receive their due portions of an estate upon an individual’s passing, it cannot account for the ultimate wishes of the deceased. Not only this, but an estate plan involves planning for scenarios where one is incapacitated or otherwise unable to make decisions for himself or herself. With the proper amount of time and thought, anyone can create a functioning estate plan that will cover most, if not all, their estate and life planning goals.