Estate planning is a very critical and important strategy in a person’s life. By creating an estate plan, you can protect your asset and secure your loved one’s financial future when you’re gone.
Estate planning has so much to offer but there are several mistakes people make that can cause the plan to do more harm than good.
1. Not customizing your will
Just as every person is different, so must their will be. It may be that you are in a blended family with children from another marriage. It could also be that you have minors or property in another state outside New York. Your will should therefore be very different from how that of a simple family would be structured. You should take these things into account and draft your will around them. If not, your complicated family will run into jams when you pass away because you didn’t address the peculiarity of your estate.
2. Not planning for incapacity
Many people wrongly think that estate is all about asset distribution. On the contrary, estate planning is concerned with the management and protection of your wealth should anything happen to you during life. It’s possible to become incapacitated – maybe due to dementia or an illness – at an advanced age such that you become unable to manage your own financial and personal affairs. Your family members would have conflicting opinions on what should be done with your assets or healthcare at each giving point. Hence, it’s important you appoint someone now who would have authority to make such decisions when the time comes.
3. Not planning for tax
Another greatly overlooked aspect of estate planning is tax planning. A proper estate plan is one that allows assets to pass to beneficiaries with minimal cost and tax liabilities. In Buffalo, NY, every estate valuing over $5.85 million at the time of the owner’s death is subject to an estate tax. This tax ranges from 5-16% of the excess, and this can be a sizable chunk of your estate. It’s better if such an amount goes to a deserving loved one instead of the state. Through proper estate planning like holding assets in an irrevocable trust, you can avoid such taxes.
4. Forgetting to update your documents
Estate planning involves so many documents that you have to keep until death or something else happen to you before they become effective. If your situation changes, you may need to update a document to account for that change. For instance, a named beneficiary may pass away before you. You would have to remove their name from your document and allocate their supposed inheritance to someone else.
An update would also be needed if you get a new child, get divorced and remarry, acquire or lose assets.
One common document people forget to update is special document with beneficiary designation, such as a life insurance policy, payable on death account, and 401(k). You should check to ensure the designated beneficiary is consistent with your current goals.
5. Not estate planning because you’re not rich
One mistake people make about estate planning is assuming it’s for only the rich. They really don’t see the need to do estate planning when all they have is a house, bank account and a car. But the truth is estate planning is going to save you from a whole lot of pitfalls regardless of how much you own.
Without estate planning, how are you sure your money will go to deserving hands?
You may have a spouse and two children. One earns and is financially stable; the other isn’t doing so well. The latter obviously is more deserving of more financial support. By writing a will, you can ensure the most part goes to whoever needs it most.
Without estate planning, the law has a default succession whereby your surviving spouse gets the first $50,000 and half of the estate, while the children shares the remaining balance equally. If this isn’t what you want, then estate planning is a must.
Again, estate planning comprises incapacity planning, and this has nothing to do with how rich you are. It’s about your welfare.
6. Not consulting an estate planning lawyer Buffalo
The best way to avoid making costly mistakes in your estate plan is by getting expert guidance from an estate planning lawyer. They would always listen to your needs, assess your situation, and advise you on the best way to go. Out of experience, they know the mistakes people often make and the outcome of certain decisions. Hence, you can stay confident knowing that you’re on the right track.
Additionally, there are laws binding estate planning. Your documents must be compliant to certain validity requirements. To avoid having an invalid document out of ignorance, consult an estate planning lawyer near you.
Estate Planning lawyer near me Buffalo NY
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