Estate planning can provide real comfort to surviving family members during their time of need. However, it needs to be thoughtful and done right to get the desired effect. To some, it would seem to be an inventory of assets and where they should go, but mistakes are easy to make.
Issues to consider
Every estate plan should reflect the interests of the person creating it, but here are five common mistakes to avoid.
- Taxes: Tax considerations should be a part of the planning, but avoiding paying taxes should not be the primary objective. A vast majority of Americans fall under the estate tax threshold, so taxes are really a non-issue. It is better to prioritize where assets should go.
- Leaving it all to the children: Many parents take comfort in providing firm financial footing to their children, but do they need it? Are there other deserving individuals or organizations that might benefit significantly from gifts? Perhaps creating a foundation run by the children makes more sense, although this is something that a parent should discuss with the children before making the arrangements.
- Treating the children equally: Parents like to think that they love each of their children equally, which may be true. But the kids are individuals with different skills, goals and personalities. It can be a mistake to split a family business equally among siblings, particularly if some have no interest in it or an aptitude for best ensuring a company’s continued success.
- Trusts and trustees: People can design trusts to address the estate and the beneficiaries’ needs, but they need to run by a trustee. Often, a single-family member acting as a trustee can strain the family dynamic. Picking a neutral professional may be the best option.
- Not updating it: It is best to update them every few years as circumstances change in regards to beneficiaries (due to death or divorce), or there have been other changes in the family or finances.
Often best to discuss this with a professional
A knowledgeable estate law attorney can provide a wealth of helpful guidance in addressing the needs of the client and their beneficiaries. Not only can they help you draft the necessary documents, but they can also later step in to help the family execute the decedent’s wishes when the time comes.