Detroit-area readers may have noticed that previous posts usually mention the need for a comprehensive estate plan. Whether your goal is to avoid litigation between family members, ensure your wishes are followed in the distribution of your assets, or set up long-term care options, comprehensive estate plans can prevent an untold number of headaches.
However, there are often so many different options to consider that an estate plan can become quite detailed over time. Most Oakland County residents likely begin their estate planning process by asking what should be done to preserve and pass down assets. Still, a more readily answered question might be the inverse: what should I avoid in order to achieve my estate planning goals?
A recent article in Forbes addressed that very issue with a list of seven mistakes to avoid when contemplating a comprehensive estate plan:
- Failing to have a plan
- Not seeking help from professionals
- Failing to update documents to reflect changed beneficiaries and titling of assets
- Not considering the estate and gift tax consequences of life insurance
- Not making use of all the available estate tax reductions
- Failing to take advantage of 2012's estate tax exemption
- Leaving assets directly to adult children, versus putting those assets in a trust
Although the article goes into detail with each item listed, two that bear special mentioning are the first and sixth.
Number 6 is worth noting because it specially refers to the increased amount this year for the federal estate tax exemption. The amount exempted this year is the highest ever, and Michigan residents who are able to should definitely take advantage before the exemption expires.
Number 1 is an obvious mistake, but many people just need to be reminded. The failure to construct an estate plan can lead to many problems, including estate bequests to individuals the deceased did not want to benefit. While it may seem impossible to plan for every contingency, a solid estate plan will attempt to do just that to avoid future probate disputes. And so we have come full circle: a comprehensive estate plan is the best option to ensure clear asset protection with a minimum of family strife.
Source: Forbes, "7 Major Errors In Estate Planning," Rob Clarfeld, April 25, 2012