Who needs an estate plan? If you own a car, a house, or an entire room full of comic books, then the answer to that question would be you.
You don’t even have to be married or a parent, although being either or both justifies the need for estate planning even more.
Unfortunately, many Americans don’t seem to be too keen on estate planning. According to a 2017 survey by Caring.com, only 42% of U.S. adults currently have a will, living trust, or any estate planning document.
If you belong to that 42%, then you probably don’t mind if it’s the state that decides who gets your assets when the inevitable happens.
If you pass on without a will or a trust, you will die “intestate,” which gives the state the green light to distribute your assets as it sees fit. You will no longer have a say on who gets what.
However, if you care who benefits from your property, you have to have an estate plan. Sure, it may seem morbid, but estate planning helps ensure that our loved ones are taken care of when we are gone.
Estate planning isn’t the simplest of tasks, though. It’s easy to make estate planning mistakes, especially if you decide to fly solo and forgo consulting an estate planning attorney.
Here are some of the most prevalent estate planning mistakes and how to avoid them.
So, you have seen the light and decided to create a will, at the very least. However, you seem to be putting it off for one reason or another, or not moving fast enough to finish it.
One thing that is very predictable about life is its unpredictability. We may be okay one day, then gone the next. The longer you wait, the higher the risk that you’ll end up passing on or incapacitated without a solid estate plan.
Don’t wait too long to draft a will, create a trust, or appoint an executor, trustee, or guardian to handle your affairs when you are no longer capable.
Let’s assume that you already have a will. In the years that have passed since you created it, did you have more children? Did anyone named in your will die? Have you gone through a divorce? Did you buy a new house?
If you say “yes” to any or all of the questions above, then you must update your will. If possible, do it periodically, especially if there’s a change in your family structure, or you acquired more properties.
Sorting out a will with omissions and names of already-departed people in it can become a monumental headache. Spare the ones you leave behind when you pass on from that by updating your will periodically.
Being an executor or a trustee comes with enormous responsibilities. You need to make sure that those you appoint for those jobs are the right people.
You can name any person over the age of 18 as executor or trustee.
It could be a family member or a close friend whom you trust to take care of all the affairs of your estate.
You also need to factor in their willingness to do the job because it involves a lot of work. You wouldn’t want to appoint anyone who’s not interested whatsoever in becoming your executor or trustee.
You might also want to consider getting the services of a professional fiduciary to act as your executor or trustee.
With a professional fiduciary, which could be an individual or a corporate entity, you’ll have an executor or trustee to handle your estate's affairs as expertly and objectively as possible.
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Estate planning isn’t just about taking care of your loved ones. It’s also about taking care of your needs, especially if an accident or illness renders you incapable of communicating.
It’s always best to prepare a living will that will give specific instructions on how you want—or don’t want—your end-of-life medical treatment to go.
With a living will, you can specify, even when you can’t communicate anymore, medications you’re willing to take and procedures you consent to undergo while still alive.
You can also create a medical power of attorney, which will enable the person you appoint to make medical decisions on your behalf if you can no longer communicate.
You can opt for DIY estate planning, but that increases the risk of committing mistakes. If you want to make sure your estate planning documents are in order and mistake-free, consider consulting an estate planning attorney.
Without a customised legal strategy, you put yourself at risk.
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*Note for U.S. citizens: US citizens are limited in their tax reduction possibilities due to FATCA and CFC laws. Opening an offshore company can increase privacy and asset protection, but you can not eliminate your taxes without giving up your citizenship. If you are a US citizen you are obligated to pay taxes on all worldwide income. Read more here about FATCA and CFC laws.
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