Estate Planning Mistakes to Avoid: A Lawyer’s Perspective

When it comes to estate planning, you must realize it’s not a one-time task. It requires ongoing attention to reflect changes in your life and the law. Here are some of the most common mistakes in estate planning.

Not Updating Your Estate Plan Regularly

Life is full of changes, and your estate plan should evolve with them. When major life events such as marriage, divorce, the birth of a child, death in the family, or significant financial changes occur, you should conduct an immediate review of your documents. Even if no significant changes occur, it’s wise to review your plan at least every three years to ensure everything remains accurate and effective.

Forgetting Key Documents

An estate plan is more than just a will or a trust. Critical documents often overlooked include:

• Durable Power of Attorney: Grants someone authority to make financial decisions if you become incapacitated.
• Medical Power of Attorney: Appoints someone to make healthcare decisions on your behalf.
• Beneficiary Designations: Ensure all accounts and insurance policies reflect your current wishes. These designations override what’s written in your will or trust, so they must be current.

Naming Improper or Unprepared Beneficiaries

When naming a beneficiary, it is crucial to think long and hard about who you choose. Naming minors or individuals with disabilities without establishing a trust can create legal and financial complications. Likewise, appointing someone who is financially irresponsible may lead to mismanagement of their inheritance. Always double-check to ensure you haven’t listed outdated names, such as an ex-spouse or estranged relative.

Ignoring Tax Implications

If your estate is substantial, you may face transfer taxes (including estate tax) that can significantly reduce what your heirs receive. Fortunately, there are strategic tools available, including:

• Lifetime gifting strategies
• Irrevocable trusts
• Charitable donations

These options can help manage or even eliminate transfer tax liability. Regardless, it is still important to consult a tax professional, like G. Deffenbaugh with Colorado Trusts & Taxes, to tailor the right approach for your specific situation.

Relying on DIY Estate Planning

While the internet does offer countless DIY estate planning tools, these online templates can cause a number of unintended issues and may not comply with your state’s specific laws. This can result in vague, unenforceable, or even invalid documents. A qualified estate planning lawyer ensures that your plan is comprehensive, valid, and customized to your needs.

Final Thoughts

Estate planning isn’t just about distributing your assets; it’s also about protecting your loved ones and ensuring your wishes are honored. By avoiding these common mistakes and working with experienced professionals, you can create a robust, adaptable estate plan that withstands the test of time. Contact G. Deffenbaugh with Colorado Trusts & Taxes in Centennial, CO, today to learn more.