Preparing a valid and well-thought out will and planning for contingencies can avoid problems for relatives and help assure that a person’s wishes are carried out after they die. There are several mistakes that should be avoided with estate planning.
First, no planning is the greatest error. Death or incapacity can come to anyone of any age, health or income. Drafting a will and powers of attorney for financial matters and health care decisions are important basic matters. Without guidance, family members may undergo needless stress and uncertainty.
Next, a plan is not effective if no one knows where it is kept. The will’s executor, trusted agents in powers of attorney or relatives should know where important documents are kept and have ready access.
Estate planning should also deal with other matters besides tax avoidance which can leave many important matters unaddressed. These include charitable contributions, dealing with a family member’s special needs, business management, addressing children from an earlier marriage and succession planning if there is incapacity.
Also, it is unwise to directly leave assets to children or grandchildren who are under 18-years-old. This may cause unwanted custodian or guardianship problems because minors cannot own property in their name. Unless a guardian is named in advanced, the court may appoint one who has different plans on how assets should be managed or invested.
Failure to properly finance a trust makes it ineffective. Assets that are not titled in the name of the trust must undergo probate.
An outdated plan diminishes its effectiveness. Failure to update an estate plan to reflect family deaths, divorce or new charitable giving can also lead to a wide variety of problems. People who have children from an earlier marriage may want to preserve assets as separate property.
Beneficiaries need to be changed to assure that property is not unintentionally left to a divorced spouse or a new family member does not receive anything. Home refinancing can make a trust invalid because some lenders may change the title because they require financing under individual names.
Experienced estate attorneys help deal with these issues. They can develop a plan and draft documents that meet a person’s needs in Michigan.