Creating an estate plan is one of the most important endeavors you will undertake during your lifetime. A well-thought-out estate plan can protect and provide for you and your loved ones. Given the importance of your estate plan, it only makes sense to do everything possible to avoid making mistakes during the creation of your plan. Toward that end, an Annapolis estate planning attorney at Sinclair Prosser Gasior explains common estate planning mistakes you should try and avoid.
- Waiting Too Long to Start Planning. One of the biggest misconceptions when it comes to the need for estate planning is the idea that you need to reach a certain point in your life, or you need to achieve a certain material success before the need for an estate plan really kicks in. While it is true that as your family and your estate grow, you will need to build onto your basic estate plan to accommodate that growth, every adult should have at least a basic estate plan in place. A basic plan usually consists of a Last Will and Testament and other supporting estate planning documents like Powers of Attorney. This type of basic planning prevents you from leaving behind an intestate estate should something happen to you. It also allows you to decide who will oversee the probate of your estate and provides you with the only official opportunity you have to let a judge know who you would want to be the guardian for your minor children if one is ever needed. Further, it allows you to decide who will make decisions for you if you ever become incapacitated.
- Appointing the Wrong People to Fiduciary Positions. Throughout your estate plan, you will likely have several opportunities to appoint people to fiduciary positions. Some examples of fiduciaries include the Executor of a will, the Trustee of a trust, and an Agent appointed through a Power of Attorney. Your initial thought may be to appoint a spouse, friend, or family member to one of these positions based solely on the fact that you trust that person. But I would encourage you to take some time to think about the duties and responsibilities of the position before making your final choice. Fiduciary positions often require legal, financial, or personal knowledge and experience that a spouse/friend/family member doesn’t have, making them a poor choice for the position. It is important to be realistic about your loved one’s ability to serve in a certain role.
- Failing to Review and Revise Your Estate Plan. Your estate plan is not something you should create and then forget about if you want a plan that actually works. Just as your life doesn’t remain static, neither should your estate plan. As you grow and change, so should your plan. During your working years, you should routinely review and revise your estate plan every three to five years. Once you retire, you can stretch that to every five to eight years. Certain life events also call for a more immediate revision of your estate plan. Marriage or divorce, for example, may prompt a need to update your plan as should things such as retirement, a move to a new state, the birth of a child, or the death of a fiduciary.
- Failing to Discuss Your Plan. Probate disputes can occur for numerous reasons; however, a common theme is surprise. When beneficiaries or heirs are surprised about the terms of an estate plan, their first reaction is often to contest the Will or Trust. Discussing the basic terms of your plan ahead of time is one way to decrease the likelihood of disputes during the probate of your estate. If you don’t want to go that route because you believe it might cause disputes now, drafting a “Letter of Instruction” is another option. A Letter of Instructions is simply a letter that you include with your estate plan that includes additional information not found elsewhere in your plan. In this case, the letter might offer explanations for the decisions you made in your estate plan, making litigation less likely.
For more information, please join us for a FREE upcoming seminar or online webinar. If you have additional questions or concerns about estate planning, or if you are ready to get started on your plan, contact an experienced Annapolis estate planning attorney at Sinclair Prosser Gasior by calling (410) 573-4818 to schedule an appointment.