The most common estate planning mistake is that many people simply fail to address the task. Sometimes they are intimidated because an estate plan points to the end of their lives. Some people shy away from discussions they know are going to be difficult or at least uncomfortable. Still others have no idea where to start. Therefore, it might be helpful to think about things you want to bypass in terms of estate planning. Here are six major estate planning mistakes to make sure you avoid.
1. Going without a plan
If you do not have an estate plan, the State of Michigan will take charge through the probate process. After your death, the court will distribute a portion of your assets, but probably not in the way you would have preferred. For example, if you have children, each will likely receive a share, but your spouse might not be left with enough money to live on. If you have minor children, they will not receive their inheritances until they reach legal age. The court will control the money in the meantime.
2. Not naming a guardian for a minor
Your will is the document in which you should name a guardian for your minor child in the event both parents die before said child reaches legal age. If you fail to do this, the court will appoint someone to raise your child and again, this may be someone you would not have preferred.
3. Creating joint ownership
Older people often add an adult child to the title of an asset, such as a family home, to avoid probate. This is problematic on many levels, but it basically prevents you from being able to act without the consent of your co-owner. The asset could also be exposed to possible co-owner misuse.
4. Not planning for mental or physical incapacity
If you cannot manage your personal or business affairs due to a stroke, heart attack, dementia or other incident that leads to incapacity, your affairs will be managed by a court appointee. The court will decide how your assets will be used to provide care for you. This is where a living trust can help; the trustee you choose will be able to act for you without court intervention.
5. Failing to keep your estate plan up-to-date
Your estate plan reflects your current personal, financial and family circumstances as well as the tax laws that are in place. These things will change over time, and you should look over your estate plan every couple of years and make any necessary adjustments.
6. Not engaging an attorney
There are a few basic estate-planning needs: making a will and preparing durable powers of attorney for both healthcare and financial matters. You may also want to explore establishing a trust. You do not want to overlook anything or make a costly mistake. Fortunately, you can turn to an attorney experienced with estate planning in Michigan to help you create a plan that will work best for you and your family.