Mistakes in an estate plan can potentially create ambiguities, lead to conflict in your family, and make your estate plan more expensive. The purpose of an estate plan is to protect your assets, make decisions regarding your children, and ensure your legacy following your death. A mistake in an estate plan can result in disastrous consequences. If you would like to learn more about common estate planning mistakes and how you can avoid them, consider contacting a knowledgeable Texas estate planning lawyer at The Law Office of Jason Carr at (214) 800-2366.
1. Failing to Plan
Creating an estate plan can sometimes be emotional for clients. While making decisions regarding your estate plan, you have to face your own mortality and make difficult decisions. However, if you fail to plan, Texas has a plan for you through their laws of intestacy. These laws set out the order and proportion of your estate certain family members are entitled to inherit under law if you do not have a legal process in place to distribute your assets at the time of your death.
The simplest way to avoid this common mistake is to create a plan. An experienced estate planning lawyer with The Law Office of Jason Carr can meet with you, identify your goals, and create a plan that addresses your unique needs.
2. Not Discussing Your Plan with Loved Ones
Some people may be afraid their loved ones will feel offended by the plans they have made and simply do not communicate with them about their estate plan. However, this approach can often lead to confusion. Loved ones may worry that someone had undue influence on you. After your death or incapacitation, they are likely dealing with grief and emotional stress. Heightened emotions, disagreement, and confusion can lead to expensive battles that drain your estate.
You can avoid this common estate planning mistake by talking to your loved ones about your wishes regarding your legacy and the decisions you have made regarding your estate plan.
3. Choosing the Wrong Fiduciary
There are important roles that you may assign to people as part of your estate plan. For example, you may have a trustee who is responsible for managing your estate, an agent who carries out duties outlined in your durable power of attorney, and a personal representative who follows the instructions of your Last Will and Testament (will). These people are fiduciaries who must put your interests above their own and prudently manage their responsibilities. You can avoid this mistake by selecting someone you trust implicitly.
4. Not Planning for Incapacity
Many people associate estate plans with wills and arrangements following their death. While this is certainly one important part of an estate plan, it should not be the only focus. According to Long Term Care, a government entity, 70% of people aged 65 will need long-term care. Your estate plan can include provisions for incapacitation that address how your assets should be managed if you are ever incapacitated, and unable to make decisions on your own behalf.
There are several ways that you can plan for incapacitation, including:
- Purchasing long-term care insurance to help pay for long-term care
- Creating a durable power of attorney that directs how your finances should be managed upon your incapacitation
- Appointing a medical power of attorney who can make important medical decisions on your behalf
- Creating a living will that states which type of end-of-life care you desire
- Drafting a living revocable trust that provides details about how to manage certain assets
5. Giving Property Directly to Minor Beneficiaries
You may want to leave part of your estate to your minor children, grandchildren, or other loved ones who have not reached the age of 18. However, children cannot legally inherit property. If you do not make proper arrangements to have someone else manage the property for their benefit, the court may need to appoint a guardian specifically for this responsibility, which can be expensive and cumbersome. You can create a trust or appoint a conservator to avoid this legal issue, and ensure that your children and grandchildren receive the gifts you choose to give them.
6. Not Taking Advantage of Lifetime Gifts
Making lifetime gifts can be an effective way to spend down your estate and also enjoy seeing your loved ones benefit during your lifetime. According to the Internal Revenue Service, a person can make gifts of up to $17,000 to an unlimited number of beneficiaries each year without incurring any gift tax, so long as you do not exceed the lifetime estate tax exclusion amount of $12,920,000 (as of 2023). This amount doubles for married couples.
7. Not Considering Special Needs
Giving a gift to a loved one with special needs can be one of the most thoughtful ways to benefit them. However, the Social Security Administration explains that assets held in trust are not necessarily excluded from consideration when determining whether a recipient will be eligible for benefits. Instead, a special needs trust may need to be created to ensure that your loved one can benefit from your gift without making them ineligible for public benefits.
8. Failing to Fund Your Trust
Living trusts can be powerful estate planning tools. However, some people go through the process of creating a trust that provides detailed information about how trust property should be managed, but they then fail to transfer any assets into the trust, rendering it useless. Before concluding your estate planning process, make sure you know how to title assets to the trust and transferring assets in the future.
9. Failing to Update Your Estate Plan
Lives change. People get married, divorced, have children, move, or die. Estate plans should also change to account for these life changes.
10. Not Seeking Help from a Professional
Some people try to complete their estate plan on their own without the legal advice of an experienced estate planning attorney. As a result, they may not create clear provisions, or create a holistic estate plan, which can lead to confusion and possible legal challenges. DIY estate planners may fail to put the proper documents in place, which can leave them vulnerable in case a serious situation arises. An experienced Texas estate planning lawyer at The Law Office of Jason Carr can help you avoid common estate planning mistakes and create a thorough estate plan that meets your particular needs, and ensures you protect your legacy. Consider contacting our compassionate and dedicated estate planning attorneys today at (214) 800-2366 to arrange a confidential consultation.