Top Ten Estate Planning Mistakes

STAFF PICK

Posted almost 5 years ago. Applies to Minnesota, 3 helpful votes

Email

1

MISTAKE # 10: "I DON'T HAVE A PLAN."

This is by far the most common mistake on the list! Planning lets you maximize the quality of your life while you control how you want your assets to be used or distributed. It took you a lifetime to accumulate your assets-the Government can spend it in two minutes! Protect yourself and your family TODAY. Studies show that the majority of people do not have a plan, but everyone should have some planning in place for their estate. Even if you own little to nothing you will save your family money with a good estate plan.

2

MISTAKE # 9: "I'LL LOOK INTO IT TOMORROW."

Procrastination is a common Estate Planning mistake. Failure to plan in advance of need, and failure to update the plan periodically often results in limited options and unintended and undesirable outcomes. The most common outcome of this mistake is extra cost and difficulty for the remaining family members. Probate, Guardianship and other costly court appearances can be avoided with good estate planning.

3

MISTAKE # 8: "WE BOUGHT A CONDO IN FLORIDA. IT'S JUST ANOTHER ASSET, RIGHT?"

Owning property in two or more states requires special attention in your Estate Plan in order to avoid unnecessary taxes and probate problems. Most states will require an additional probate just for those assets. This could double your estate costs after death. Many individuals will use a Trust or special Deed to avoid probate in both states.

4

MISTAKE # 7: "IF MY SPOUSE OR I BECOME SICK OR DISABLED, OUR KIDS WILL MAKE DECISIONS FOR US."

The truth is, without a Health Care Directive (also known as a Health Care Power of Attorney and Living Will), important decisions about your health care will be made by someone appointed as your guardian through a court hearing. This may not be the individual you would have chosen and it can be a difficult process to experience. In our current world, without the proper authority, Doctors and other medical personnel can't even discuss your health care needs without authority from your estate planning.

5

MISTAKE # 6: "SOME DAY, WHEN I RETIRE, MY SON WILL TAKE OVER MY FARM OR BUSINESS."

What are your plans for your family's business if you should become disabled or die before retirement age? Your son may be too young, unable or unwilling to take on the family business you worked so hard to build. Many families do not get along well after the key parent is unable to make the decisions. Also, planning for your business can allow you to retire on your own terms. Without good planning the result of this mistake is that the family fights and the son who would have been the next farmer or business owner is looking for a new job.

6

MISTAKE # 5: "I DON'T NEED A PLAN. I'M JUST LEAVING EVERYTHING TO MY SPOUSE."

This is not always the best strategy, because all assets you leave are added to the surviving spouse's estate, creating a "second death wallop" of estate taxes when your spouse passes on. An Estate Planning Attorney can help you avoid this and other traps. Also, without a plan your spouse may be vulnerable to creditors and predators. In many cases, there is a re-marriage after the first death. Imagine what can happen to your children's inheritance then.

7

MISTAKE # 4: "I DON'T NEED A PLAN. I'M JUST LEAVING EVERYTHING TO MY CHILDREN."

In many states, children are considered "adults" at age 18. Even if your children are adults, it's important to consider their circumstances: creditors, marital difficulties, substance abuse. A good estate planner can help you devise strategies, such as trusts, to keep your children's inheritance safe, and away from divorce, creditors and predators.

8

MISTAKE # 3: "I GET ALONG WITH MY STEPCHILDREN...I'M NOT CONCERNED."

Today's blended families require special attention when preparing an Estate Plan. We have a variety of strategies to ensure that your spouse, children and stepchildren are provided for according to your wishes. You may be surprised at how much a relationship can change after one spouse passes away. In many cases this mistake ends up causing an unfair distribution to your children.

9

MISTAKE # 2: "I HAVE A PLAN."

Most of the plans I review are out of date or do not meet the client's original intentions. The laws change, people change and even lawyers can learn new ways of planning better. Using an estate planning attorney can help you achieve your goals in the best possible way. A good estate planning attorney can help keep you up to date with today's changing legal climate.

10

MISTAKE # 1: "I ALREADY HAVE A WILL."

Most individuals do not know that a will requires probate; if used. Most of my clients choose to avoid a probate by using a revocable trust. Also, everyone needs ancillary documents such as a Power of Attorney, Health Care Directive and Living Will. Even if you already have these documents, they need to be reviewed from time to time, especially if you have moved, married, or divorced, had children, or to reflect changes in the law and financial situation. These misconceptions and mistakes regarding Estate Planning can cost you and your family thousands of dollars and unbelievable heartache. Meeting with a trusted and qualified Estate Planning Attorney can help you to avoid these pitfalls.

Additional Resources

Estate Planning Strategies: Collective Wisdom, Proven Techniques, WealthCounsel 2009

The Ford Law Office, L.L.C., Estate Planning & Elder Law

Rate this guide

Can't find what you're looking for? Ask a Lawyer

Get free answers from experienced attorneys.

 

Ask now

28,706 answers this week

3,481 attorneys answering