
You may know that estate planning is crucial to provide for your loved ones and protect your legacy after you pass.
Unfortunately, many people make costly mistakes during this process. These common estate planning mistakes can lead to delays in asset transfer, financial losses, legal disputes, and conflict between your loved ones.
At Massingill, we help our clients simplify complex legal matters, providing them with peace of mind and practical solutions. Led by a team of experienced estate planning attorneys in Austin, we create customized estate plans for each client, helping people create the legacy they want.
1. Not Making an Estate Plan
Not making a plan is one of the most common estate planning mistakes. Without an estate plan, your loved ones will have to figure out what:
- You owned,
- Debts you had, and
- You wanted.
The law may also constrain them as to who gets what. In Texas, if you do not leave a will, your assets go to your surviving relatives, beginning with your spouse and descendants and moving outward along your family tree as follows:
- Parents,
- Siblings and their descendants, then
- Your grandparents and their descendants.
For example, if you have no spouse or descendants but you do have a surviving parent, your siblings typically will not get a share of your estate. As a result, the passing of your property may leave out important people or fail to provide for those in need. Starting the estate planning process as soon as possible to help you avoid this mistake.
2. Trying to Plan on Your Own
Do-It-Yourself estate planning tools may seem cost-effective, but they often result in:
- Incomplete plans,
- Documents that do not meet legal requirements,
- Conflicts within or between estate planning documents, and
- Unclear instructions.
To avoid this mistake, seek professional guidance from knowledgeable estate planning attorneys who can tailor documents to your needs and comply with Texas law.
3. Delaying Planning
Many believe estate planning only becomes necessary later in life. However, unexpected accidents or medical emergencies can occur at any time. Without a plan, you may leave your loved ones in a difficult position. Delaying your plan may result in lost opportunities to provide for yourself and your family more effectively and efficiently.
Start planning early, especially if you have children, get married, or own significant assets to help you avoid this mistake. Even a basic plan provides essential protections and can be adjusted as your life evolves.
4. Being Disorganized
For your loved ones to be able to receive your assets and pay off your debts, they need to know what assets you own and what debts you have. Failing to organize your debts and assets can result in:
- Requiring your loved ones to scour your documents and accounts to identify your assets and debts;
- Overlooking assets for months, years, or forever; and
- Reducing your estate value due to unexpected creditor claims.
Create a detailed inventory of all assets and debts. Your physical, financial, and digital properties should be considered assets. Consider mortgages, credit card debt, student loans, and any other money you owe to others as debts. Update your inventory regularly, store it in a secure and easily accessible location, and share it with your lawyer.
5. Forgetting or Omitting Assets
Neglecting to include certain assets in your plan can result in your loved ones having to scramble to figure out how to manage those omitted assets, which may have to pass according to Texas law instead of your plan. Forgotten assets frequently include:
- Digital assets like cryptocurrency;
- Online financial accounts or money transfer apps like PayPal, Venmo, or CashApp;
- Business interests like LLC membership, partnership interests, or stocks; and
- Intellectual property like copyrights, trademarks, and patents.
To avoid this mistake, maintain your inventory and ask others to help you ensure the inventory is complete.
6. Not Planning for Debts
Unpaid debts can significantly reduce your estate’s value. Without a plan for your debts, your loved ones may be unable to execute your plan as intended and may have to sell off valued assets. Your lawyer can help you address your debts in your estate plan and identify the best strategies for managing it.
7. Not Communicating Important Information
Failing to share details about your estate plan with your loved ones can result in misunderstandings, conflicts, and their failure to respect your wishes.
Ensure your loved ones know what role they play in your estate plan. Be sure to notify your designated executor, trustees, or powers of attorney and communicate your plans to your loved ones. Provide key individuals with instructions and access to essential documents.
8. Ambiguity
Ambiguities in your estate plan can lead to confusion over what you want and how to achieve it. For example, vague language in a will might result in the wrong people getting certain assets.
To avoid this mistake, rely on your attorney to draft clear provisions. Then, ensure you understand what your documents say.
9. Not Taking Advantage of Non-Probate Options
Many assets pass through the probate court process. However, there are non-probate assets that can bypass the probate process altogether. These assets include:
- Beneficiary designations in retirement accounts,
- Life insurance,
- Trusts, and
- Transfer-on-death (TOD) or payable-on-death (POD) designations.
Failing to take advantage of non-probate assets may require your loved ones to sell significant assets you would prefer they keep.
For example, life insurance allows someone to leave larger amounts of money to multiple beneficiaries rather than a tangible asset, such as a house. Without insurance proceeds, children may have to sell the house to receive as much as they would have under a life insurance policy.
Working with a lawyer can help create a balanced and fair estate plan using probate and non-probate assets.
10. Not Revising Plans as Life Changes
When significant life changes occur, failing to revise documents can result in outdated plans that no longer align with your wishes. Some life events that usually require updating your estate plan include:
- Marriage,
- Divorce,
- Births,
- Adoption, and
- Death of beneficiaries.
You should also update your plan if you obtain significant new assets, like real estate, or start a business. Regularly reviewing your plan to update documents following major life changes can help you avoid this mistake.
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Estate Planning Done Right: Avoid Costly Mistakes
At Massingill, we are committed to providing personalized, flat-fee planning services and helping you avoid making costly mistakes in estate planning. Our experienced team ensures your estate plan is comprehensive, up-to-date, and legally sound. Contact us to schedule a consultation with one of our knowledgeable estate planning attorneys in Austin.
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