As an estate planning attorney, I hear stories every day about common estate planning mistakes and their consequences. Mistakes can vary, but often result in someone not adequately planning to take care of themselves during their life, planning for their disability, and planning for their survivors after passing.
With a comprehensive estate plan drafted by an experienced estate planning attorney, you can avoid the following common mistakes:
1. No Plan
This one may be obvious, but many studies show that more than half of Americans have no estate plan at all. It doesn’t matter if you’re a billionaire or just one of us regular folks – everyone needs an estate plan. This makes it our number one planning mistake.
2. Outdated Plan
Many people who do create estate plans mistakenly believe that once they’ve done it they can put it in a drawer and never look at it again. As the years go by, values change and people go in and out of our lives. An estate plan needs to be updated as your life changes. However, statistics show that only 10 percent of Americans have a current and functional estate plan.
3. No Disability Plan
A common mistake is thinking that estate planning is only about distributing property after death. A complete estate plan should also plan for possible incapacity. This can be accomplished by creating a Revocable Living Trust, Durable Power of Attorney and Healthcare Directives.
4. No Plan for Children
In Arizona, it is impossible to name a guardian for your minor children without creating an estate plan. Specifically, you must create a Last Will and Testament to name a guardian to care for children in the event that something happened to you.
5. No Inheritance Protection
You work hard for your money and it makes sense that you would want to protect it. But hard earned assets are often wasted by heirs or lost to greedy and selfish people (which may also include the heirs). A well drafted Revocable Living Trust can help protect a beneficiary’s inheritance from creditors, predators and themselves. Call Scottsdale trust attorney Abigail Neal to talk about the benefits of creating a trust.
6. Improper Estate Tax Planning
A well drafted estate plan can provide substantial savings for taxable estates. Without a plan, the IRS may get a very generous cut.
7. No Probate Avoidance Planning
Without a properly funded Revocable Living Trust, probate is required for nearly all estates. There is no privacy in probate, and it can turn very costly quickly if there are any disputes between potential heirs.
8. No Probate Avoidance Planning for Multi-State Real Estate
A person may live in state A and also own real estate in state B. If that person passes without an estate plan, his heirs will likely need to open probate actions in BOTH state A and state B. This can be avoided with a properly funded Revocable Living Trust.
9. No Planning for Blended or Non-Traditional Families
If you don’t create an estate plan, your state of residence will make one for you. This is called the law of intestate succession. These laws are especially unkind to blended and non-traditional families. Bottom line: if you have a blended or non-traditional family, it is critical that you create an estate plan.
10. No Business Succession Planning
Generally only about 30% of family business survive in the second generation. This is often because business owners concentrate on running the business and not its eventual transfer. A comprehensive business succession plan should include a plan for the owner’s divorce, incapacity or death, and also potential disputes between owners.
The benefits of creating an estate plan are substantial. Protect yourself, your family and your business and leave your legacy according to your values. Call Arizona estate planning attorney Abigail Neal at (480) 699-7992 to plan ahead for tomorrow, today.