Although estate planning may seem daunting, it’s really about organizing your affairs and planning your financial future. By consulting an experienced estate planning attorney, you can avoid some common estate planning mistakes.
Common Estate Planning Mistakes
1. Not Having a Will
A will is the most basic estate planning tool that establishes how your property will be managed and distributed to your heirs after you die. Additionally, a will is the only way to name a guardian of your minor children. If you and your spouse die simultaneously without naming a guardian, the court will intervene to name someone who may not share your values. Similarly, without a will, your assets will be distributed according to South Carolina’s laws of intestacy, which means that the wrong people may inherit your assets.
2. Not Updating a Will
If you have a will in place, you should know that it’s not a once and done situation. Instead, your will needs to be kept up-to-date with inevitable lifestyle changes, such as buying a home, starting a family, acquiring wealth, and retiring. A general rule of thumb is to revisit your estate plan every 2-to-3 years so that it reflects these and other events. It is also important to align your beneficiary designations on retirement plans and life insurance policies with your estate plan.
3. Choosing Incapable Heirs
While we’d like to believe that our heirs are capable of managing an inheritance, some individuals lack financial skills, are spendthrifts or may have substance abuse or gambling problems. One way to protect an incapable heir from squandering an inheritance is to establish a spendthrift trust in which you designate a trustee to supervise the assets and make payments to the beneficiary according to the terms of the trust.
4. Appointing the Wrong Executor
It is common for estate planners to name a relative (e.g. a spouse, adult child) or trusted friend to act as the executor. If this person is not trustworthy or capable, however, the beneficiaries may challenge the appointment, which can become a lengthy and costly court battle. For this reason, it is critically important to select someone with the skills, judgment, and integrity to carry out the important duties of an executor.
5. Not Planning for Incapacity
A well-conceived estate plan will prepare you for the unexpected as well as the inevitable. In the event that you sustain an injury or an illness and become incapacitated, it is necessary to give powers of attorney to trusted individuals to manage your affairs and coordinate your medical care. By failing to create a durable power of attorney and a health care proxy, your loved ones will need to ask the court for permission to do so, which could lead to disputes and avoidable delays during an emergency.
Avoid These Common Estate Planning Mistakes with Willcox, Buyck & Williams
In the end, the best way to avoid these common estate planning mistakes is to work with an experienced trust and estate lawyer. Your attorney can tailor a plan to your needs, prepare the foundational estate planning documents, and provide ongoing counsel to ensure your plan is up-to-date.