People sometimes make assumptions with regard to estate planning, and they make decisions that ultimately yield negative results. In this blog post, we will look at five estate planning mistakes that people often make when they do not understand all of the facts.
1.) Do-it-Yourself Estate Planning
There are websites on the Internet that sell do-it-yourself legal documents, including last wills and living trusts. While it is not against the law to create your own estate planning documents, you may want to take pause before you decide to go it alone using downloads or worksheets that you purchase online.
The highly respected magazine Consumer Reports has advised against DIY estate planning, and you may want to heed their advice.
2.) Enabling a Spendthrift
If you leave direct, lump sum bequests through the terms of a last will, there could be people in the family who squander their inheritances. These loved ones may experience hardships later on.
There are estate planning tools that can be used to protect a spendthrift from his or her own poor decision-making.
3.) Failure to Protect Assets
Legal actions can enter the picture when you have been able to accumulate assets. If you are the target of a lawsuit, a great deal could be lost.
There are asset protection strategies that can be utilized when you are planning your estate. You can protect assets for your own purposes, but you can also protect assets that you intend to leave to your loved ones.
4.) Estate Tax Inaction
High net worth individuals can be exposed to the federal estate tax. The tax is applicable on asset transfers that exceed $5.43 million. It is important to understand that any real estate that you own is countable, and life insurance proceeds are also part of your estate.
The estate tax carries a 40 percent top rate that can take a huge bite out of your legacy. If you fail to implement tax efficiency strategies, your family could pay a heavy price.
5.) No Incapacity Plan
Many elders become unable to communicate sound decisions late in their lives. If you were to become incapacitated without making any preparations in advance, the state could appoint someone to handle your affairs. People who fail to take action often become wards of the state.
You can prevent a guardianship if you include an incapacity plan within your broader estate plan.
Our Firm Can Help
The average layperson is simply not going to understand the lay of the land when it comes to estate planning. If you discuss your unique personal situation with a licensed estate planning attorney, you can be certain that you are taking the right steps to provide for your loved ones.
If you would like to take action, contact us through this page to set up a no obligation consultation: Indianapolis IN Estate Planning Attorneys.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.