In order to have an effective estate plan and properly provide for your heirs, it is vital that you avoid the following estate planning mistakes:
- Not Having a Will. Without, at the very least, a basic will, your assets will pass to your heirs according to the Commonwealth’s laws of intestacy, which effectively means that your personal desires with respect to your assets may not be followed upon your death.
- Not Planning for Incapacity. As we continue to live longer due, to among other things, better medical care, we may reach a point where we lack the capacity to make important health and financial decisions. It is vital that you have a power of attorney in place allowing your appointee to make health and financial decisions on your behalf.
- Failing to Plan for Children with Special Needs. If a child with special needs is not planned for properly, the child risks being disqualified from receiving Social Security benefits, which means that his or her care will have to be funded by other means; in this instance a special needs trust may be appropriate.
- Failing to Business Succession Plan. With a well drafted business succession plan, you can ensure that your business is in the control of those you choose upon your death, disability, or some other life altering event, increasing the likelihood that the business will prosper for many years to come.
- Failing to Prepare for Minor Children. If you have minor children, you should amend your will or have one prepared that nominates personal guardians for your children in the event that you and your spouse die before your children reach the age of 18. In the event that you fail to make a will that designates personal guardians for your minor children, the court will decide who the personal guardians of the children will be.
- Making Improper Beneficiary Designations. As discussed in one of my prior articles, in Pennsylvania, beneficiary designations found on bank accounts, life insurance policies, IRAs and other investment accounts control over your desires for the disposition of the assets found in your will. It is imperative that you check your beneficiary designations on these accounts on a regular basis to confirm that they coincide with your estate planning desires.
- Not Reviewing Your Estate Plan. As previously discussed, it is recommended that you review your estate plan after all life changing events and, at the very least, once a year.
- Creating You Own Estate Planning Documents. While it is very possible that the estate planning documents you prepare on your own or find on the internet may be enforceable, nothing can replace the advice of a competent legal professional in assisting you with your estate planning, as estate planning is often more complex than you may think.