Recent studies have shown that only a little more than half of all Americans have a Will or Trust document in place to direct their estate after they pass away, and that the vast majority of those documents have not been updated in the last five years. Even worse, it’s been reported that most adult children are unaware if their parents even have an estate plan and would be unable to find estate planning documents, if they did indeed exist. These can lead to serious troubles down the line and are among some of the top mistakes people make regarding their estate plans. We have compiled this list of additional estate planning mistakes that you should be aware of, and hopefully avoid:
In a perfect world, there would be no sibling rivalry – both before and after the death of parents. However, it’s just a fact of life that families don’t always get along, and that could not be more painful or true than when a parent passes and disputes arise about the inheritance. A lot of times this is caused by unequal distributions amongst siblings. Estate planning attorneys often advise their clients to have a conversation with their future beneficiaries in advance about why they are – or are not – leaving them certain assets or valuables in their estate. If the parent is uncomfortable having this type conversation, a letter written to each beneficiary to be read upon the parent’s passing can serve the same purpose.
Estate planning attorneys often see this issue come up with estates that do not leave enough revenue to pay estate taxes, forcing the beneficiaries to sell property such as homes or other assets just to pay off estate tax debt. Careful planning with an estate planning lawyer can help you avoid these kinds of issues, and makes it worthwhile for you to meet with your estate planning attorney on a regular basis to learn about changes in the estate tax law for your financial situation so that you can update your estate plan accordingly.
Out-of-Date Estate Plan
Unexpected changes happen in life, such as a falling out with a family member, a divorce, or a new marriage. However, legal issues arise when these changes are not accounted for in your legal documents. For example, if you were to disinherit a child but not change your Last Will and Testament to reflect this – well, that child won’t technically be disinherited. You can also flip that around and have a situation where you and your child have reconnected after a falling out, but if you never added that child back into your estate plan, they may not receive that inheritance you decided to give them after all. Divorce and marriage can also wreak havoc on out-of-date estate plans, so it is important that you speak to an estate planning attorney after any major life events.