Estate planning can be a tedious and complicated process, which if not conducted properly can result in assets being wasted due to being placed in expensive probate proceedings or unduly subjected to creditor claims and tax liability. The sad truth is that many estate plan-related-mistakes are preventable. Although every situation will require a unique estate planning approach, based on experience, a few easy to implement, steps can be identified to reduce the risk of a failed or underperforming estate plan.
Posted on August 19, 2016
Keep the plan clear
The first cardinal rule to avoid estate plan failure involves making certain that the estate plan has crystal clear intent. The intent of an estate plan means that an estate owner’s final wishes as to how his or assets should be distributed are honored. However, these final wishes are often not honored, not because they are not important, but because they are not clear. Therefore, it is important that when drafting a will or creating a will substitute to avoid the probate process, the intent of the estate holder should be expressed clearly, in that what assets are to be involved, whom they should go to and what manner they should go to the beneficiary are expressed clearly. Ambiguity will ultimately lead to added expense and frustration for intended beneficiaries when a probate court must determine what the estate planner meant when instructions were given during the estate planning process.
Allow for Flexibility
Circumstances can change between the time an estate plan is put in place and when the estate plan will be executed. For example, assets may be acquired, sold, increase in value or decrease in value. Further, the intended beneficiaries may change as the list family and friends grow or shrink. One can illustrate the need to update an estate plan periodically by asking ten years ago are the people whom I would have included in my estate plan the same. Similarly, ten years in the future can I think of any individuals who would or could be included in my estate plan? I the answer to either of these questions is yes, then an estate plan should be created or amended in a way that accounts for changes in circumstances. Commonly this involves periodically reviewing the estate plan to examine its timeliness or creating bequests that account for changes in circumstances.
Have a Goal Oriented Mentality
Lastly and most importantly, estate planners should have a goal-oriented mentality in that there is a clear plan as to how to transfer assets from their current ownership to beneficiaries. Further the plan should be able to achieve its goals under any circumstances. When establishing estate planning goals, estate planners should examine current assets, taking note of how they are titled (jointly or individually), the prospects estate assets may increase or decrease in value, and lastly how the estate plan can be carried out in a way that reduces tax liability and preserves assets so that they can be used by beneficiaries.
Estate planning is a complex task; counsel experienced in estate planning, and the financial consequences of estate planning can assist individuals or their families in creating or adapting an estate plan to meet long-term goals.
DISCLAIMER: Attorney Advertising. The information provided in this post is for informational purposes only and should not be construed as a legal advice. It is not intended to create an attorney-client relationship with a reader and should not be relied upon without first seeking professional legal counsel.