How to avoid the five most common estate planning mistakes
No one expects to become involved in a legal dispute. Whether it’s divorce, a criminal matter or business dispute, people usually think of a legal battle as something happening to someone else. Nowhere is this more apparent than in estate planning and probate litigation. Not only is there a certain natural aversion to thinking about what happens to your assets when you die, but families, whatever their previous conflicts, generally care for each other. People therefore tend to think that their estate will become resolved with or without a comprehensive estate plan.
Unfortunately, that is not the case.
A comprehensive, thorough and tailored estate plan is the best insurance against a legal dispute. Rather than forcing relatives to guess at your intentions, it is best to lay out a complete plan, in writing, tailored to your situation and according to Michigan state law, which governs estates and probate for its residents.
Below are five common mistakes that Michigan residents make when planning out their estate plan that can lead to future disputes. If you are guilty of any one of these, you are not alone – just be sure to reexamine your estate planning needs.
The five mistakes are:
- Assuming that your estate requires no special considerations. Chances are you aren’t a billionaire, but that doesn’t mean you don’t have individual estate planning needs. If you have a minor child, for example, you may wish to reserve your assets so they are used wisely, such as for higher education. You likely have special charities or causes you wish to help. These situations are by no means unique, but do require unique estate plans.
- Delaying creating an estate plan or failing to update it regularly. Life gets busy, and on the priority list of financial needs, estate planning often falls near the bottom. But creating an estate plan is just as important as other financial planning. An estate plan also must change with life circumstances. Divorce, the birth of a child or grandchild, financial boons or setbacks – all require an updated estate plan.
- Not preparing for future emergencies and life events. Even if you are healthy now, chances are you will need extended and expensive medical care at some point. If you turned 65 today, you would have a 70 percent chance of needing long term care at some time in your life. Too often long-term care is decided on last minute, as needed. Planning in advance can save your family time, money and worry, while ensuring you get the medical care you want later in life.
- Leaving out the little (and not so little) things: Most of us spend more time online than we’d like to admit; some of us seem only to get outside when we take the dog on a walk. But often both our digital assets and our pets are forgotten in estate planning. Without a plan in place for the family pet, it could end up in a shelter or euthanized. Since many of our financial transactions take place online, it is important to allow someone with a financial power of attorney the ability to access online accounts if needed.
- Underestimating your own legacy and the power of estate planning. “Check-the-box” estate plans are readily available, but they lack the specialized planning that every person who creates an estate plan needs. Some do not even account for individual state law. A comprehensive estate plan can be a powerful, helpful legacy to family members and good causes; a paint-by-numbers approach can backfire rapidly.
If you have estate planning questions or wish to have your estate plan reexamined by experienced estate and probate attorneys, contact Prince Law Firm to discuss your needs and legal options.