According to AARP, only 34% of Americans have created an estate plan. It is not the most fun topic to discuss considering it requires you to think about life for your loved ones after you are gone. Such thoughts can certainly bring about mixed emotions. However, it is important for all New York residents to create an estate plan to better protect their family, business, and even close friends. Estate planning is not a one-and-done process, and costly mistakes can be made if your estate plan is not updated periodically. To that end, the following are just a few examples of what to avoid when creating, updating, and maintaining an effective estate plan.
Your wishes must be made clear in your will and estate plan. Confusing language left to interpretation can cause family members and beneficiaries to commence litigation to settle questions regarding the interpretation and implementation of your estate plan. Needless to say, there is no substitute for precise directives as drafted by a knowledgeable attorney who is familiar with your unique set of estate planning needs.
Change the estate plan as your life changes
When your estate plan is originally created, it should reflect the needs of your family at that moment. As time passes, your family structure and dynamic will almost certainly change. You may have, children, grandchildren or acquire greater assets and/or a business. If you don’t change your estate plan to reflect the changes in your life, important aspects of the plan could be rendered ineffective, and your testamentary intentions will not be realized. Worse still, your beneficiaries might disagree as to how to treat your estate, and litigation could ensue.
Not naming contingent beneficiaries
Beneficiaries should be named to receive or manage any asset in an estate plan during the estate planning process, and contingent beneficiaries should be named in case something happens to the primary beneficiary. Skipping this critical step can create confusion, an ineffective estate plan, and inevitably litigation.
Estate plans are as dynamic as the person who creates them. They are important for anyone who wants to preserve their financial legacy, and by extension their family’s financial well-being after they are gone. Failing to make a proper estate plan, or failing to update your estate plan over time, can have very real, detrimental, but wholly avoidable consequences for the people you love.