An estate plan is a set of documents that protects your estate during your lifetime and provides instructions for its distribution after your death. A comprehensive estate plan can also provide you with end-of-life care, limit family disputes, and keep your estate out of probate court. A Metro East estate planning attorney is an essential ally to tailor an estate plan to your unique needs and create a legally valid set of documents.
There are several benefits to having an estate plan, whether you have a large estate or a small number of assets. It limits the tax consequences on your heirs, provides them with the most benefits, and provides you with certainty in how you and your estate will be cared for.
In order for you and your heirs to see the benefits of an estate plan, it must properly address your needs and the specific requirements of your estate. Crucially, it must also be legally enforceable.
There are several mistakes that individuals may make regarding their estate plans, which may prevent them from seeing the benefits of their planning. By understanding these mistakes, you can better avoid them. Some of the most common mistakes people make include:
- Failing to Have an Estate Plan
Even a simple estate plan is useful to provide for your loved ones and safeguard your estate. Many individuals believe that because they don’t have significant wealth, they do not need an estate plan. This isn’t the case. If you have any assets, including property, bank accounts, or personal items, an estate plan can help your loved ones more efficiently distribute these assets after your death.
Any estate without a trust in place will enter probate court. If you have not even created a will, then the court will appoint an executor to your estate. This executor may or may not be who you would have appointed. They pay creditor claims from the assets in your estate and distribute assets to your family members according to intestate succession laws.
Even if intestate succession reflects how you want your assets distributed, the probate process is long and costly. Without a will in place, the distribution of your estate is more likely to be contested, making the process of probate even longer.
- Waiting Too Long to Make an Estate Plan
You want to start your estate planning sooner than you think. When you begin planning early in your life, you have time to review the documents to ensure they are legally sound and truly match your wishes. Many wills or trusts created late in an individual’s life are vulnerable to contests under the claim that the creator did not have the mental capability to create an estate plan.
- Failing to Appoint an Executor
It’s important to name an executor in your will and a trustee successor in your trust. This individual is in charge of managing and protecting the trust or will, handling creditor claims, and distributing the assets to their intended heirs or beneficiaries.
- Not Naming Contingent Beneficiaries
When you only name one beneficiary for each asset, this can cause issues. If the beneficiary dies before you, and you do not update your estate plan or are unable to, the asset enters probate court. By naming contingent beneficiaries, you have a backup plan for the asset.
- Failing to Update the Estate Plan Regularly
It’s essential to update your estate plan after life changes, including marriages, deaths, or the start of a new business. An outdated estate plan will no longer reflect your current wishes, may leave some assets without beneficiaries, or may render the entire estate plan unenforceable.
FAQs
Q: What Are the Most Common Estate Planning Mistakes?
A: Once an estate plan has been made with experienced legal counsel, the most common mistake people make is failing to continue to update it. Estate plans should be reviewed every two to five years and after any significant change in life.
A change may include marriage, divorce, retirement, growing families, deaths in the family, and other alterations to families or property. Some life changes can change the property and beneficiaries listed in an estate plan to the extent that the estate plan is no longer enforceable. By regularly updating the estate, you ensure that it is in agreement with your current wishes for the distribution of your estate.
Q: What Are the Biggest Mistakes People Make With Their Wills?
A: One common mistake individuals make when they create a will is not ensuring matching beneficiaries. Assets such as bank accounts, retirement accounts, and insurance policies may have beneficiaries already listed. If the beneficiaries listed in a will do not match the asset beneficiaries, this can cause significant disputes during the distribution of an estate.
It can be hard for a family and a court to determine the true intention of the creator of the will, and this can lengthen the process of probate considerably. It’s important that your wishes are clear when you create a will and that beneficiaries of specific assets are updated to match your will.
Q: How Do I Avoid Inheritance Tax in Illinois?
A: Illinois does not have an inheritance tax, but it does have an estate tax. The state estate tax does not apply to all estates, only those worth over $4 million. To avoid an estate tax, there are several steps an individual can take.
One of the most common is placing assets into a living trust. This enables you access to your assets during your life, and the assets pass to your successor trustee after your death. Because the assets remain in the ownership of the trust, they do not pass into the state’s jurisdiction. Individuals may also use life insurance planning or other tools in estate planning.
Q: What Are the 3 Main Priorities You Want to Ensure With Your Estate Plan?
A: Your own priorities for estate planning will depend on the unique needs of your estate and how you want to distribute it. The priorities of most estate plans include:
- Keeping your estate out of probate, lessening the time and money your beneficiaries must spend in court, and increasing the financial benefits they receive
- Protecting yourself if you become incapacitated or incapable by providing medical directives and powers of attorney
- Safeguarding your estate and its assets during your life and after your death
Contact Stange Law Firm
At Stange Law Firm, we can help you determine your individual goals for estate planning and help create a plan that reflects that. Contact us today.
