Common Estate Planning Mistakes

On behalf of Law Offices of Frye, Fortich & Garcia, P.L. | March 15, 2023 | Estate Planning

Common Estate Planning Mistakes

Here are 7 of the most common estate planning mistakes people make:

1. Not Communicating with Your Heirs. Anyone who is assigned a role in your estate plan — agent, personal representative, trustee, etc. — should know what their responsibilities are once you pass away. We encourage our clients to communicate with those persons so that their roles will not be a surprise to them upon your death. This can help reduce delays in administration and even possible conflict.
2. Not Taking Taxes into Consideration. Estate taxes really only affect larger estates (currently those estates with a value in excess of $12.92 Million), but if your assets are close to that amount and you do not take this possibility into account, your heirs and beneficiaries could end up with a nasty surprise. There are numerous strategies you can take now to minimize your estate tax obligation. An estate planning professional can guide you through the tax planning process.
3. Not Planning for the Death of a Personal Representative or a Trustee. If your personal representative or trustee dies and you have not designated a backup, the courts will step in and appoint someone to administer your estate. Typically, these court-appointed fiduciaries incur fees that may be substantially greater than someone you appointed. Since this may be contrary to your wishes, it is important to plan for these contingencies.
4. Not Naming a Beneficiary on Your Retirement Accounts or Insurance Accounts. Retirement accounts and insurance policies are great for estate planning because, when beneficiary designations are set up properly, the accounts and policies pass directly to their intended recipients, without going through probate. If you do not name a beneficiary, however, the accounts and policies may be subject to probate, where they can be claimed by creditors.
5. Not Updating Your Plan. f you experience a major life event, you’ll want to update your estate plan right away. Getting married or divorced, experiencing a death of a loved one, having a child (or welcoming a new grandchild), or even one of your beneficiaries developing a substance abuse issue or gambling problems are all common examples of situations that may require you to update your estate plan.
6. Not Funding Your Trust. Trusts are vehicles to pass along assets without going through probate. However, to avoid probate, your trust needs to be funded, meaning assets should be titled in the trust’s name. If your trust is not properly funded, it serves little purpose. Your heirs and beneficiaries will still end up in probate court, and your assets may or may not be distributed the way you wish.
7. Not Having Contingency Plans in Place. No matter how well you plan, chances are something in your estate will not go exactly according to plan. For each possibility, it’s important to have a contingency plan in place. An experienced estate planning attorney can help with this.
   At Frye, Fortich & Garcia, P.L., we have decades of experience helping our clients with every aspect of estate planning and elder law. We’ve seen every mistake in the book, and are here to make sure you don’t make any of them! Give us a call today at 305-931-3200 or use the contact form on our website.