Avoid These Common Estate Planning Mistakes
When people give others advice, they often tell them what they should do, but there is another side of that coin. It can be even more important to steer clear of actions that can yield negative consequences. In this legal guide, we will look at five commonly made estate planning mistakes to help you
DIY Estate PlanningThere are websites that sell generic, boilerplate legal documents including wills and trusts. You may assume that this is a simple solution that you can embrace to take care of this responsibility.
The first problem with the DIY approach is the simple fact that a layperson will not be aware of all the tools that are available and why you would use one instead of another. A simple will is not always the best choice, and there are multiple different types of trusts.
When you plan your estate, you are facilitating the passing of your legacy, and this is a serious matter. You would not take any major steps that involve large amounts of money without any professional guidance, and you should apply this logic to your estate planning efforts.
ProcrastinationSurveys that are conducted consistently find that most American adults do not have estate plans in place. If you are one of them, action is required, because you never know what the future holds.
Many young adults feel as though it is not a priority, but at the same time, these are the people that are the parents of dependent children. Estate planning becomes an absolute must when you have other people relying on you.
Outdated PlanEstate planning attorneys always emphasize the fact that this is an ongoing process. The plan that you put in place initially will be based on a snapshot of your life situation at that time. Over the years, things change, and update will be necessary.
If your current estate plan does not reflect your true wishes at any point in time, you should definitely work with your attorney to make the necessary revisions.
There is another consideration when it comes to estate plan updates. Even if there have been no changes in your life that would trigger the need for an estate plan revision, relevant laws are always subject to change, so you should work with your lawyer to review your plan periodically.
Failure to Address IncapacityPeople often avoid uncomfortable subjects, and this is understandable to some extent. At the same time, if you keep your head stuck in the sand and you do not confront potential challenges, an emerging situation can be more difficult to handle.
This dynamic applies to incapacity among elders. Over 30 percent of people that are 85 years of age and older have Alzheimer’s disease, and this is not the only cause of cognitive impairment.
In addition to these difficulties, some people cannot communicate sound decisions due to physical ailments that they experience late in their lives.
Your estate plan should address this eventuality. You can state your life support preferences in a living will, and you can empower someone to make medical decisions on your behalf in a durable power of attorney for health care.
If you have a living trust, you can name a disability trustee to act as the administrator. A durable power of attorney for property can be utilized to name someone to manage property that is not held by a trust.
Nursing Home CostsMost people will need some type of paid long-term care eventually, and 35 percent of elders will reside in nursing homes. These facilities are very expensive, and Medicare does not pay for the custodial care that they provide.
Long-term care costs could devastate your legacy, but there is a solution in the form of Medicaid. If you take the right steps in advance, you can position your assets wisely with future Medicaid eligibility in mind.