Many individuals, especially those who have worked hard to build up some assets they wish to pass down to beneficiaries, do not properly understand the risks of poor estate planning. The basics are simple, and are broadly available to just about anyone who has property, but the details are often surprisingly complex or offer little wiggle room if correct action is not taken.
In the past couple of years, the public saw two high-profile celebrities with estates worth millions of dollars pass away with insufficient estate plans that ended up costing their beneficiaries significantly.
In the case of Prince, the legendary musician passed away without a will, leaving his survivors with a fairly large mess to sort out. Similarly, when actor Philip Seymour Hoffman passed away suddenly, he did have a will. However, because he never married his long-time partner and the mother of his children, probate ended up taking nearly $12 million from the estate, which could easily have transferred to a legal spouse had they married.
If it can happen to multi-millionaires, it can happen to anyone who doesn’t properly create an estate plan. If you believe that you may need to create or strengthen your estate plan, you can consult with an experienced attorney to protect your interests and rights through the strength of the law.
Common costly estate plan blunders
Like we’ve already noted, simple errors can have catastrophically costly consequences. It is impossible to know which threats face your estate plan, but making sure you have one is a good place to start.
Whether you never created a will or more expansive estate plan, or if you have a will but are unsure if it truly protects your interests or may need updating, you should consult with an estate planning attorney. It would certainly be a shame to lose a large portion of your estate to taxation and probate because of failing to create a proper estate plan. Unfortunately, this happens all the time.
The greatest threat to your estate, in many cases, is you. No one can create an effective will on your behalf, you must take that step on your own. Similarly, when you experience significant life changes like entering or exiting a marriage, a significant increase or decrease in income, or the death or addition of named beneficiaries, it is important to update your plan to reflect these changes.
Other common issues revolve around failing to take simple steps to reduce your tax burden, such as charitable giving, creating well-crafted trusts, or making sure that instruments like insurance policies are properly handled.
Depending on the nature and complexity of your assets, you may have a significant set of important chores ahead of you. Be sure to get all the help you need to fully protect yourself, your estate and your legacy through proper planning.