Making plans for your estate may seem uncomfortable. Although you may have ideas about who you’d like to receive your assets when you pass away, putting those thoughts on paper will mean acknowledging your future death. Residents of Phoenix, Arizona, who need assistance with estate planning should look for a local estate planning lawyer familiar with Arizona state laws. When you decide to put your wishes on paper, here are some estate planning mistakes to avoid:
1. DIY Estate Planning
One common mistake in estate planning is using a DIY estate planning kit. Although these kits often include the correct legal forms and a clear set of instructions, they don’t fit every circumstance. The documents used in DIY estate planning are often outdated – or may not comply with Arizona state law.
Another critical reason to refrain from doing your estate planning is that some estates are complex. You may have more than one trust or decide to add a codicil to your will. A DIY kit won’t be able to account for all the circumstances that could be involved in an estate.
Doing your estate planning yourself is one of the estate planning mistakes to avoid. Taking care of your family is too precious to leave to chance. Phoenix has many skilled and compassionate estate planning attorneys who will speak for you and ensure your assets are correctly distributed after you’re gone.
2. Going with the Cheapest Professionals
Choosing a bargain attorney to protect your estate is not a wise decision. When people tell you, ‘You get what you pay for,’ they’re especially correct about attorneys. Choosing an estate planning attorney based solely on their fee is not the way to ensure your estate distribution.
There are small estate planning services that may change a smaller fee than others. These firms may or may not be competent. Not choosing your attorney carefully is another of the estate planning mistakes to avoid. If you value your assets enough to be sure they are allocated to your family after your death, invest in the best way to ensure this will happen.
3. Not Planning for Long-Term Healthcare Costs
Although you may have a good idea of your current financial status and can make a prediction of your assets for the future, that knowledge isn’t likely to include all eventualities. You could become disabled or injured. If you need long-term healthcare after either of those events, it could severely disrupt your estate plans. Your assets might be depleted by medical costs or the costs of a nursing facility.
If you can’t speak for yourself because of a disability or accident, who would you designate to speak for you? An estate planning attorney can help you find a long-term care insurance plan to meet your needs. Your attorney will also help you designate someone to act as your Power of Attorney – and legally speak for you if you cannot make those decisions.
If you become permanently disabled, you may become eligible to receive SSDI (social security disability insurance) payments. Your Power of Attorney would have the authority to contact a Phoenix social security lawyer to help you receive the benefits you’re entitled to. They would work with both attorneys to get what you need – and what will be included in your estate. Failing to consider all your possible long-term care costs is one of the easiest estate planning mistakes to avoid.
4. Not Informing Your Lawyer of Complex Family Situations
Naming a beneficiary is sometimes not enough to ensure that person receives the inheritance you want them to get. Another relative may feel they deserve to get a legacy – and they may believe their claim is based on Arizona state law. Today’s complex family situations can often complicate the probate process (the period when your will or trusts are being legally enacted).
If you foresee problems within your family situation (such as an ex-spouse or a child you haven’t legally acknowledged), let your estate planning lawyer know during the planning stage. You may also need to consult a local family lawyer. You may feel reassured by knowing that only a spouse, a child, or a person named in your will has the right to contest your will. A person can only contest the will if they can prove there is a legal reason the will is invalid.
These reasons could be something as minor as a page missing a signature – or an unwitnessed signature. They may also try to say you weren’t of sound mind, influenced, or coerced to sign the will. Warning your estate planning lawyer about people in your life who might attempt to contest your will is a wise precaution. A contested will is one of the more complicated estate planning mistakes to avoid.
5. Not Keeping Your Will Up to Date
According to Kiplinger.com, there are occasions when you should update your will. One of the common reasons for updating your will is when you have a child. In addition to including the child in the distribution of your asset, you must name someone to be the child’s guardian if both parents die before the child reaches 18.
If you have a will that names your spouse as an heir, change your will if you file for a divorce. If one of your children gets married, you should create a trust for the child. A trust can provide funds for the child in the event of your child’s divorce. If one of your heirs becomes a substance abuser, talk to your attorney and decide how to handle this person’s role in your estate.
If one of the heirs you named in your will should pass away, you should change your will to reflect that fact. Another reason for change would be if Arizona estate laws should change any of your will’s tenets. Whenever you update your will, you must notify any law firms that have had a part in your estate planning. Updating your will can prevent you from making one of the estate planning mistakes to avoid.
6. Not Planning to Transfer Your Business Ownership
If you own a business or are a business partner, consider the company as one of the assets you need to distribute as part of your estate. Even if family members are part of your business, you can’t assume the business will transfer seamlessly to them. If your company has a relationship with a business lawyer, they may have already encouraged you to document a legal plan for the succession of your business ownership.
If you already have such an agreement, you can incorporate it into your estate plan. Some people in Arizona who are in a business partnership may want to have a buy-sell agreement. This agreement will allow your partners to buy your share of the business after your death.
Some businesses will facilitate this agreement by purchasing life insurance policies for all their partners. The funds from the insurance policies are used to help the other partners with the price of your share. Neglecting to spell out the transfer of your business is one of the essential estate planning mistakes to avoid.
7. Casually Leaving a Dependent Out of Your Will
You don’t have to leave your assets to anyone you don’t want to. In some states, you won’t legally be allowed to disinherit your spouse or minor child. Every state has laws to protect children who were unintentionally disinherited. So, if you want to leave your child out of your will, you must be sure your attorneys explicitly state that the child is excluded.
Most states have laws preventing you from leaving your spouse out of your will. If you leave them out of your will, your spouse can legally claim part of your estate in those states. The percentage they are awarded depends on the laws of your state. Some states will base the spouse’s award on the marriage’s length.
In most states, including Arizona, you have the right to disinherit a child. If your child has become independent or has already fully supported the child of your ability, you have the right to disinherit them. If one of your children is disabled, you should protect them by making a trust in their name. Considering these matters will keep you from making one of the inadvertent estate planning mistakes to avoid.
8. Not Investing in Life Insurance Coverage
A life insurance policy can be a valuable way for you to provide tax-free funds for your family after your death. If you also have life insurance through your employer, it may be a nice bonus but will offer a small payout. The best thing to do is discuss life insurance options with a professional insurance agent.
A life insurance policy can be paid before your will has completed the probate process. Since your beneficiaries will get the funds right away, it can assist them in paying for your funeral or burial expenses. After you pass away if your policy is unclear, your heirs may need to secure the services of contract attorneys in addition to the estate planning team.
In addition to paying for your funeral expenses, your life insurance payment can be used to pay estate taxes. Estate taxes will be charged to your heirs for the inheritance they get. Obtaining a life insurance policy is a small investment of your time but can be one of the estate planning mistakes to avoid.
9. Forgetting About Power of Attorney
As previously mentioned, a power of attorney is (POA) someone you trust to speak for you when you cannot. You can have more than one POA: a Financial POA to safeguard your funds or a Healthcare POA to make healthcare decisions in your name. Your POA can decide if you need additional legal help or purchase life insurance for you. The POA has the right to speak to your lawyers and to see the documents you have prepared.
Choosing your POA can be difficult. If you are married, your spouse may be the best person to act as your spokesperson. If you have several adult children, you may find yourself undecided and may want to avoid seeming like you favor one child or the other. To solve this dilemma, you can choose more than one POA.
The decision about a POA is often the first action your estate planning attorney takes with you. T If you can’t complete your estate planning, the POA can complete it. Keep this in mind, and you’ll be able to bypass one of the estate planning mistakes to avoid.
10. Investing Your Retirement Savings Carelessly
If you’ve been working all your life, it’s understandable that retirement will be a financial adjustment. Going from a salary to half or one-fourth of that amount can be a challenge. That adjustment may cause you to dip into your retirement accounts.
After a few months or years, you can find yourself with no funds in your retirement account. You may also have no idea how to support yourself on social security payments. As you can imagine, this will significantly affect your estate planning.
When you find yourself in this predicament, it’s time to figure out how to live on your social security payments. Some retired people decide to go back to work part-time, or at a less strenuous job. Talk with a financial advisor for help to live on the funds you have left.
If you have assets you can sell (like a vacation home, a second car, or fine jewelry), now is the time to sell them. If you find you’re completely out of financial assets, you may need to turn to a team of bankruptcy lawyers. Keep this possibly dire future in mind when you are using your retirement funds, as it is one of the estate planning mistakes to avoid.
The time to begin estate planning is when you’re young. However, if you haven’t begun by retirement age, it’s not too late to contact a Phoenix estate planning lawyer. Estate planning is your way of providing for your family when you’re gone, so treat it as a love letter they’ll open when you’re no longer able to tell them how you love them.