Estate Planning Mistakes

Sooner or later everyone will die as a result of their last medical condition. And while this fact is unavoidable, what happens to an individual's estate after he is gone is very much within his control. For those people who wish to preserve their assets for designated purposes (such as family or special charities) it becomes necessary to undertake some special advance preparations. Performing these important preparations is commonly referred to as estate planning. In order for an individual to help ensure that his assets are protected (or final wishes are carried out) there are some common mistakes that need to be avoided.

Listed below are a number of these estate planning faux pas.

• Procrastination. This can entail a failure to create an initial plan, or a failure to update an existing plan. Neglecting to explicitly lay out your wishes in a valid will and testament (and or trust) will greatly increase the chances that trouble will occur. The state will generally step in to determine how the assets should be divided and they will typically levy a substantial amount of taxes in the process.
• Improper ownership of life insurance. Individuals with estates valuing over $1,000,000 should place the ownership of life insurance policies into an irrevocable trust. If the policy is placed in the person's name then it becomes subject to extremely high levels of taxation.
• "Take it with me" mentality. Many wealthy individuals have a difficult time legally sheltering their assets because it requires some dispersal of funds (i.e. gifts and trusts). They need to keep the big picture in mind and remember that they won't be able to bring the money with them when they die.
• Failing to disclose the location of a will. It does little good to spend the time and money necessary to complete a will if no one is able to locate it after you are deceased. Relying on generic estate forms. Estate planning can often be a very complicated procedure. It is wise to enlist the help of a qualified lawyer to assist you in your preparation. This is particularly true if an individual possesses a large estate.

The same preparation and planning that was used to build your estate should be applied to protecting it. A failure to address this area can have devastating results. Common examples of these negative consequences include: massive amounts of taxation, (which deplete funds which were intended for loved ones) and having your estate divided by a state appointed arbiter. While making these preparations it is important to avoid the common mistakes that could easily undermine a lifetime's worth of assets.

This website provides only a general overview of estate planning. You should consult an attorney, or perhaps a CPA or tax advisor for additional guidance.

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