What estate planning mistakes are caused by misconceptions?
On behalf of Scaringi Law posted in Estate Planning on Monday, January 18, 2016.
If New Year's resolutions were memorialized in the form of a list, here's our law firm's contribution to starting 2016 off without any estate planning mistakes.
As context, it should be noted that certain common mistakes arise from misconceptions. One is that a last will and testament is necessary only for individuals with substantial assets. To the contrary, anything of monetary or sentimental value can be identified for disposition in a will. Similarly, anyone with a life insurance policy might be surprised to learn about the benefits of transferring that policy to a life insurance trust. Doing so might ensure that more of the proceeds go to beneficiaries instead of the IRS in the form of estate tax.
In addition, a will can help govern the practical matters of estate administration after one's passing. Such matters may address how to cover the costs of the funeral and any debts of the estate, may include a list of one's beneficiaries and loved ones, and can indicate whether certain personal affairs need to be addressed, such as the closing of one's social media or other online accounts.
Another common mistake arising from a misconception is the belief that making a will is a one-time event. To the contrary, a will should be periodically updated to reflect common life events such as births or deaths, any new property acquired, or other changes in beneficiary designations.
Yet another common misconception is failing to address the possibility of disability in one's estate plan. In the event of incapacity, an estate plan can provide for who will have decision-making authority over issues like medical care, finances, and even raising minor children.
Finally, our attorneys have observed that many estate plans fail to include a responsible plan for gifting. Annual gifts up to the gift exclusion can be a smart way to reduce estate taxes. Check out our law firm's website to learn more estate planning tips.
Source: FindLaw, "Ten Common Estate Planning Mistakes to Avoid," copyright 2015, Thomson Reuters