There are a number of myths that persist about estate planning. To perform successful estate planning, however, it is critical to learn which of these myths are incorrect. Unfortunately, one of the truths of estate planning is that errors have the potential to result in complications with the administration of a person’s estate. As a result, this article reviews some of the important errors about which a person should remain aware during the estate planning process.
# 1 – Failure to Name a Beneficiary
Even though many people understand the role of a beneficiary, failure to name a beneficiary can result in a number of substantial obstacles including delays and creditor issues. There is also a risk that failure to name a beneficiary will result in a person’s estate being administered in a way that they did not desire.
As a result, it is critical to make sure to name a beneficiary and to keep beneficiaries in estate planning documents updated.
# 2 – Failure to Remove a Former Spouse
There are various types of assets and estate planning documents that can create serious complications if a person fails to remove a former spouse. For example, failure to remove a spouse from an IRA can create a substantial obstacle for a new spouse. To avoid these complications, a person should make sure to adequately updating estate planning documents following a divorce.
# 3 – Passing Assets Directly to Minors
Many minors are unable to handle finances in a mature way, which makes the role of a guardian particularly helpful. It is a very common error for people during the estate planning process, however, to pass assets directly to a minor, who proceed to spend the money in frivolous ways.
# 4 – Failure to Include a Residuary Clause
Residuary clauses are a particularly important part of wills and other estate planning documents. These clauses encompass anything that is not named in a will or included in a trust, which include items that a person does not yet own but will at the time of death. By failing to place a residuary clause in an estate plan, there are a number of uncertainties that can arise about how a person’s estate should be administered.
# 5 – Not Updating Estate Planning Documents
A number of life events including births and deaths have the potential to significantly impact a person’s life estate. As a result, it is important to make sure that a person’s estate plan is kept up to date. If none of these events occur in a person’s life, it still a wise idea to update an estate plan once every five years.
# 6 – Not Creating an Estate Plan
Many people are uncomfortable with handling issues of their own mortality. As a result, these people end up not creating estate plans to make sure that their assets are properly transferred after their death. It is important to understand the value of estate planning and to engage in it.
Contact an Experienced Estate Planning Lawyer
Because estate planning is complex and any error could result in substantial obstacles, you should not hesitate to contact Ettinger Estate Planning today to schedule a free initial consultation.