What are Some Common Estate Planning Mistakes?
If you’ve created an estate plan, you’ve already avoided the worst estate planning mistake anyone can make—failing to create an estate plan at all. Once you’ve begun the estate planning process, there are other potential pitfalls that could result in difficulties for your heirs or cause your assets to be distributed in a way that runs contrary to your wishes. Learn more about potential errors and common estate planning mistakes in estate planning below, and speak to our Twin Falls estate planning attorneys for more information about creating an estate plan in Idaho.
1. Failing to create a living will or designate someone to hold power of attorney
The time when you’re creating an estate plan is the perfect opportunity to create a living will, also known as an advanced healthcare directive. This instrument alerts family members and medical professionals to the types of end-of-life care you do or don’t want to receive if you become unable to speak for yourself. It can also be wise to create a contingent power of attorney document, which will designate someone you trust to make financial and legal decisions on your behalf should you become temporarily or permanently disabled.
2. Leaving large cash gifts to young heirs
Designating a loved one as a beneficiary on a bank account or life insurance policy means that the beneficiary will receive the asset immediately after your death. This saves them from waiting for a gift to go through probate before they receive it. However, this strategy can come with downsides. Namely, if a young beneficiary receives a large sum of cash that they can spend without restriction, they may not have the foresight or experience to make prudent use of the money. You might instead consider designating only adults as beneficiaries on your accounts or insurance policies, or naming as beneficiary a trust that will distribute assets to younger recipients on a conditional basis, or only when a seasoned trustee has elected to make a distribution.
3. Not reviewing and revising your estate plan regularly
If you (smartly) create an estate plan while you’re young, there will (hopefully) be lots of time for life to intervene and your priorities to change before your assets are distributed. During this time, you may marry, divorce, have children, purchase large assets, develop relationships with charitable organizations, or become estranged from someone to whom you had been close. All of these events can have an effect on your estate plan. It’s important to periodically sit down with your attorney and review your estate plan to ensure that it will carry out your wishes and that there are no additions or changes you wish to make.
If you have questions about creating or updating an Idaho estate plan, contact the knowledgeable, seasoned, and detail-oriented wills & trusts attorneys at the Twin Falls offices of Canyon River Law Firm at 208-736-6000.