With any legal issue, knowing what not avoid is often just as important as knowing what you need to do. That may be especially true when it comes to estate planning.
Here are some potential mistakes you want to avoid when you’re working out your own estate plans:
When choosing your estate executor or trustee, pick the most qualified person for the job.
Giving two people equal power and authority over your estate is a prescription for disaster. While you may be trying to avoid conflicts by honoring both people equally, especially if they are your children, a small difference in opinion can result in a major legal hassle between them.
Not everyone gets along well just because they’re related to each other. Be honest with yourself about any family squabbles going on and unresolved conflicts and plan accordingly. If you have two children who always fight, for example, don’t make either of them your executor or trustee. Ask a third child to fill the role, use another relative or hire a professional instead.
Do your family members know which bank has your safety deposit box with your grandmother’s ring in it? Do they know where the insurance policies are kept?
Your heirs could be in for a difficult time if you don’t leave instructions to guide them to the documents and assets they will need when you’re gone.
If you only have one heir, it could be tempting to just put your heir’s name on your property and assets as a co-owner. That way, he or she would automatically be entitled to everything.
That could result in serious problems. If something happens and you want to disinherit your heir, you can’t. If your heir gets into a lot of debt, you could lose everything. Finally, once you are gone, some of those assets — like the house — may be considered gifts for tax purposes. Taxes can often be avoided with proper estate planning.
Finally, one thing you should absolutely do is keep your estate plans updated. Laws change, relationships change and assets change. A check-in with your elder law attorney is essential every few years or after any major life changes.