An estate plan is necessary asset management and division in the event a person becomes incapacitated or passes away. An estate lawyer can help ensure that you and your family will be financially secure should the worst befall you or a loved one. Below are a few common estate planning mistakes to avoid when preparing your estate:
Life insurance is another important piece of estate planning. Life insurance serves several important purposes. Life insurance can provide direct benefits to certain beneficiaries and also provide liquidity that an estate can use to quickly settle any last debts that the deceased may still have. However, life insurance must be considered alongside other estate planning devices. A sudden influx of estate funds may trigger estate taxes for a named beneficiary. It is important to consult with an estate planning and/or tax attorney to minimize unnecessary exposure of a beneficiary or estate plan to estate taxes.
Failing to Manage Your Digital Estate
Digital estate planning has become increasingly important as Americans spend ever increasing time on their phones. Some people may own social media accounts or digital currency worth hundreds of thousands of dollars. Even if a person doesn’t have any social media, most banks, 401ks, retirement accounts, and other financial institutions are easiest to access online.
Digital property is not always about money. Digital photographs, videos, and social media postings can have significant emotional value. Executors, trustees, and/or beneficiaries should be able to easily access bank accounts and/or social media accounts to preserve or transfer important digital property.
Failing to Draft a Living Will
A good estate plan should take into account situations where the testator is still alive but can no longer make decisions for him or herself. Unexpected large medical bills can quickly drain an estate if not carefully managed. For example, a bad automobile accident can render a person in a coma for an extended period of time. An advanced healthcare directive or living will can guide loved ones if the testator is unable to express his or her wishes following a deliberating injury or accident.
Forgetting to Update the Estate Plan
Gifts and beneficiaries must both be named in a will or trust for a recipient to receive the gift. If a loved one isn’t named in a written will or trust, he or she may not receive anything. Likewise, if a gift no longer exists, then that gift cannot be given. For example, if a will gives all the cash in a certain bank account to a child, but that bank account was closed years beforehand, the child may not receive the intended cash. Estate plans should be updated periodically to prevent any unintended disappointments. Marriages, divorces, births, or the purchase of a major asset will impact most estate plans and those wills and trusts should be updated accordingly.
Failing to Draft Your Estate Plan Properly
One of the biggest mistakes in setting up an estate plan is failing to ensure that the will or trust is drafted correctly. Creating an estate plan is not worth it if cannot be executed. Fortunately, the requirements for writing a will or trust are low compared to other legal documents.
Most states require that the testator be a legal adult in order to write a will, meaning that he or she must be at least 18 years of age and/or legally married. Wills must be executed in front of one or two witnesses, depending on the state. Some states permit the use of handwritten or videotaped wills in addition to or in lieu of a witnessed will. Finally, some states require that a will be notarized.
In contrast, a trust is a legal instrument in which another person or other entity holds legal title to property for the benefit of others. The trustor must name a trustee to administrator properties placed in trust for certain beneficiaries. The trustee then administers or distributes the property for the beneficiaries’ use after the trustor passes away. Some states may have the same witness and notary requirements for trusts that exist for wills.
Do I Need An Attorney For Estate Planning in Utah?
If you are trying to draft a will or trust, you should consult with a skilled estate lawyer in Utah. A skilled attorney can help draft the necessary legal documents and help set up your estate. It is important to work with a local attorney so that you receive the most relevant legal advice regarding your estate in Utah.