Whether you are a media mogul or a hardworking family with a single bank account, making time to ensure that your estate planning is done is important to protecting your family.
The only way to make sure that your wishes are carried out after your death is to have the proper estate planning documents prepared in advance, according to a post from WMUR.com, "Money Matters: Common estate planning mistakes." Some people make the mistake of thinking that estate planning will be extremely complicated, while others think it will be far simpler than it ever could be. While every situation is different, there are a number of mistakes that are common at every income and asset level.
Failing to plan. Many of us don't have a will—but like it or not you do have an estate plan. The plan is called the law of your state and the probate judge. If you die without a will, your estate will be divided according to intestacy laws. In that case, there's no guarantee this will be what you wanted. A one-page will or a more complex plan with other strategies like a trust can help reduce estate taxes, save on administrative costs, and put you in the driver's seat when deciding how your assets are to be distributed to your heirs, charities, or to help a family member with special needs. Another important point: in many states a will is the only way that you can name a guardian for your minor children. So, if you move from one state to another, be sure to check local laws.
Failing to maximize your marital estate exemption. The new portability law provisions ease some of the estate tax planning burden by allowing each individual a $5.43 million federal estate tax exemption in 2015. If one spouse dies without using up his or her $5.43 million, the unused portion may be transferred to the other spouse for use at the survivor's death (hence the term "portable."). You should also remember to investigate any state estate taxes when reviewing your strategy and make certain to discuss how portability is elected with your attorney.
Naming a relative as executor or trustee. Your executor is the individual or company responsible for administering your estate after you die. It's a big responsibility, so this person needs to take the job seriously. A loved one may be too emotional to focus on this task, and there can be conflicts if the executor is also a beneficiary. You might consider using a professional along with the family member. This can save you both time and money. Talk to your estate planning attorney.
Relying on advice from family or friends. Your brother's kid may be a first year law student with all kinds of enthusiasm, but you need to work with an experienced estate planning attorney.
Regardless of the size of your estate, estate planning is something that every responsible adult needs to do for their loved ones. Certain documents need to be prepared, both to give your heirs peace of mind and to carry out your wishes after you are gone. It takes planning, which requires the help of an estate planning attorney. As your circumstances change over time, you will want to review these documents to ensure that they accurately reflect your wishes as you go through the many stages of life.
Reference: WMUR.com (December 10, 2015) "Money Matters: Common estate planning mistakes"