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In the first installment of this two-part series, we talked about how, in addition to being a tool for handling asset distribution at the end of your life, a properly executed estate plan also protects your health and finances while you are living. Further, it was pointed out that an estate plan provides the scaffolding for building a family business succession plan and is a crucial part of preparing for possible long-term care needs. The versatility of estate planning also means that the process is thick with pitfalls, however. The first five most common estate planning mistakes were covered in the first installment of this series and the next five are presented below.
Five (More) Common and Costly Estate Planning Mistakes
1. Overlooking Government Long-Term Care Benefits
The final item on the last article’s list was failing to plan for long-term care. This point is a continuation and yet deserves individual attention for how very common it is. Many people of all income classes don’t realize that they are able to qualify for public benefits that shield them from losing their life’s work to long-term care costs. On average, a private room in a nursing home facility goes for over $8,800 per month—an amount that would cripple most families. With proper planning, most or all of this cost can be avoided, but only if arrangements are made well ahead of time.
2. Failing to Protect Your Estate from Legal Challenges
A majority of U.S. adults don’t have an estate plan and a big reason why is the discomfort of approaching the subject. Not only does estate planning mean contemplating your mortality, but it also means taking an honest look at family dynamics and thinking ahead to conflicts that could arise when it comes time to distribute your assets. These are rarely comfortable subjects, but it is important that you address them early and openly. Once you’ve talked your intentions through with loved ones, it is important to protect both your and their interests by putting things in writing. A trust is a popular vehicle for doing so as it provides you complete control over distributions without the risk of legal challenges.
3. Forgetting to Fund Your Trust
A trust is a powerful tool but only insofar as it contains the assets it aims to protect. Designing a trust articulates your intentions concerning asset distribution; funding it ensures that these intentions are carried out. If you fail to fund your trust, your assets will pass through probate court before arriving to beneficiaries where they are subject to a fleet of potential challenges.
4. Relying on DIY Estate Planning Services
Planning your estate is among the most important tasks you will ever undertake. Online DIY services provide templates of estate planning documents and limited instruction on filling them out but they don’t tell you what you don’t know. An experienced estate planning attorney, on the other hand, will ask you those questions that expose your blind spots and call unforeseen risks into view. Further, they will ensure your documents reflect current legislation and stay up-to-date as changes arise.
5. Failing to Plan at All
The worst and, unfortunately, most common estate planning mistake is to not plan at all. Not only does doing so ensure your heirs will face unnecessary administrative costs when probating your estate, it further places those who depend on your financially at all kind of risk. With no plan in place, family members may be cut off from vital funds while probate grinds its slow gears. Dependents who rely on public benefits may see these compromised by an inconvenient lump-sum inheritance. Worst of all, family tensions may erupt causing irreparable damage to those you care about most.
To learn more about planning your estate and avoiding common mistakes while doing so, do not hesitate to reach out to the Law Firm of Christopher W. Dumm either by calling 417-623-2062 or using the contact form on our website.
Contact the Estate Planning Attorneys at the Law Firm of Christopher W. Dumm