In the midst of our everyday lives, many people believe that only ultra-wealthy or elderly individuals need estate planning. This misconception is the first and most common estate planning mistake we tend to make. Even though we know that planning for the future is essential in every stage of our lives from starting a family, moving and changing jobs while keeping an eye on retirement – no matter how far away it is. But it doesn’t end there.
We need to openly talk about what will happen to the assets we’ve accumulated over a lifetime of hard work and how it will affect the ones we love when we die. Equally as important will be a very frank conversation about decisive life and death medical decisions while still preserving our personal wishes and beliefs. While estate planning requires us to face our own mortality, most individuals and families feel an enormous sense of calm and relief when everything is complete and in place.
The process of planning your estate will designate how your property will be distributed upon your death. It is important to have a contingency plan in place to establish beneficiaries for your estate’s will and trust and make sure your medical decisions are followed in the event of an incapacitating medical event. An experienced Utah Estate Planning Attorney will work with you to customize an estate plan to fit your current situation and foreseeable future circumstances. Here are the top 5 estate planning mistakes to avoid in Utah:
#1 Dying Intestate
Dying without a valid will in place is called dying intestate. When this happens, intestacy laws in Utah dictate how your bank accounts, real estate and other assets will be distributed upon your death based on a set of predetermined, inflexible rules. Priority will be given to close relatives and if no surviving relatives are found, your assets become property of the state. Dying without a will in place can be big business for The Beehive State if you don’t legalize an estate plan.
Everyone, no matter your financial situation, needs to understand that the time and effort put into an estate plan will ensure that you your voice will still be heard in the event of an unexpected death or incapacitating medical emergency. Make the time today, especially if you are married and if you have children who depend on you. A thoughtfully-prepared estate plan will take into account the unpredictability of life and death and will help your loved ones avoid added stress during an already stressful time.
If you leave it up to the kindness of the government, your spouse and heirs will suffer needless frustration as your assets are tied-up in equitable distribution legal claims. Covering all of the bases with an effective and knowledgeable attorney who specializes in estate planning will provide you with peace of mind, knowing that those you care about will still have your guidance to help them get through the devastation of losing you with the financial support they depend on.
#2 Leaving Too Little, Too Late
Leaving behind only a last will and testament will be too little, too late. Married couples often believe that a will is the only thing they need and believe that joint ownership will help the estate avoid probate. However, overlooked issues like taxes and real property will still need to be examined and ruled on in probate court. Unfortunately, even if your will designates beneficiaries that are not closely related to you, there can be unintentional, yet devastating consequences – which brings us to #3, the mistake of designating outright distribution of assets.
#3 Outright Distribution of Assets
Did you know that an inheritance left to an unemployed beneficiary is typically gone within 18 months? Alarming, but true. Even though you love the beneficiary and want them to have the money or property, outright distribution without considering the aspects of individual consequences is financially irresponsible. Unfortunately, there are many unsettling consequences that are often overlooked, even within a detailed will.
Critical consideration of each individual beneficiary is necessary to make sure your good intentions are met. Statistically, traits like unemployment, financial irresponsibility, in-laws (the gold-digging type) or your spouse getting remarried will end with unintended and sometimes disastrous results regarding the remainder of your assets. Only a comprehensive trust will ensure that your intentions, through thoughtful contingencies, are legally established and recognized. The following options are widely used:
- Spousal Income Trust
- Lifetime Trust for Your Heir(s)
- Asset Protection Trust
- Special Needs Trust
#4 Ignoring the Gray Areas
Estate planning is a complex process and establishing a trust (either revocable or irrevocable), to distribute your assets, is not the end of this story. You must also make financial and medical decisions in the event you are unable to communicate them. Many times, these unfortunate situations are so much more difficult for loved ones if they don’t have access to your medical records or don’t understand your wishes. Estate planning with a pro will envelope important issues, including:
- Advance Healthcare Directive,
- HIPAA Medical Authorization
- Financial Durable Power of Attorney
- Assignment of Personal Property
The importance of an estate plan cannot be overstated. Securing everything you’ve worked for and accumulated in your lifetime, by making sure it goes to the beneficiaries you care about, should be a priority. Once your estate plan is established, a trusted partnership with an experienced estate planning lawyer will make updating the plan for life-changing events like having a baby, buying a house and accumulation of money from investments easy as you move forward in life.
Your estate is the sum of your assets, including real property like your house and your vehicle(s). But physical property is only a part of your estate, it also includes your personal entitlements and legal rights. Once you recognize that practically everyone has an estate, the next step is to actively seek the advice of a professional to plan your estate and protect your loved ones. Even though estate planning is a complex undertaking, an experienced professional can effectively explain everything that is involved and guide you through the process seamlessly. Utah-based attorney, Eric Froisland is an estate planning advocate with 15+ years’ experience in estate planning in Utah. Call Eric to learn more about wills, trusts, the benefits of different types of insurance and how these options apply to you and your family.