A well thought out and thorough estate plan is one of the best things you can leave behind for your loved ones. Like all others, high net worth individuals should take the process seriously to ensure that their wishes are honored, and their assets are dealt with properly after their passing. However, in practice, many people neglect to create a proper plan for the distribution of their respective estates. Here are some of the most common estate planning mistakes we come across in running our legal practice:
1. Not accounting for taxes: Especially with high net worth individuals, the taxes that could be due on your estate can be very substantial. A sophisticated estate plan, utilizing various estate planning options such as testamentary trusts, exemptions, and insurance (to name a few examples) can ensure that more of your assets will go to the people you love rather than being paid out in taxes. However, even accounting for taxes, serious problems can arise if the language within your estate planning documents is not precise and the terms are not clearly defined.
2. Not clarifying ambiguous terms: Even the most comprehensive estate plan can be derailed by the inclusion of ambiguous language. Make sure that you not only create a plan for every aspect of your estate, but also that every item in your will is accounted for and described with specificity. One of the best ways to weed out ambiguity in your estate plan is to utilize a team of experienced estate planning individuals who can work with you to clarify any potential areas of concern. To avoid disputes over ambiguous language, you will also want to avoid keeping your true intentions from your loved ones.
3. Not communicating your intent to loved ones: Will contests are a very emotional process, as the legal battle involves loved ones fighting over what they believe the deceased person would have wanted if they were still living. While communicating with your loved ones and potential heirs will not prevent every possible issue that may arise in the future, pre-death communications among family members can assist the family in understanding what the deceased individual would have wanted. Sit down with your family and talk about your estate plan. However, even oral promises can fall short if those wishes are not reduced to writing.
4. Not putting everything in writing: No matter what you say, there is the chance your words may be misinterpreted. Whatever promises you make, be sure to put them in writing. Not only will this clarify your intent, but it will also allow you to maintain a running list of your promises, quickly tipping you off to any duplicate commitments or anything else that could end up subject to an expensive legal suit. Keeping your estate plan up to date with everything you have promised is important, but that can all be for naught if you fail to update your estate plan as your life circumstances change.
5. Not updating your estate plan to account for life changes: As a general rule of thumb, you should review your will and other estate planning documents at least every five years to make sure everything is up to date. But if there has been a major change in your life–such as a marriage, a divorce, a birth, a death, or if you have had a significant change in financial circumstances–you should update your estate plan once again. But if there is one thing riskier than neglecting to update your estate plan, it is failing to create an estate plan.
6. Not creating an estate plan at all: “This is depressing.” “I’m too young to be planning my estate.” “I will have time to do this later.” These are some of the most common excuses for not having an estate plan. However, passing away without a will can be a long, expensive, emotionally draining process, and your loved ones deserve closure without any unnecessary controversy. Death is never an easy proposition to confront, but it is inevitable. Be prepared, and your family will thank you.
These mistakes are all avoidable with the help of the right team. If you or someone you know is looking to create an estate plan, the experienced team at Chepenik Trushin can work with you to structure a plan that will reflect your true wishes and withstand outside challenges. Please do not hesitate to contact us for a consultation.