Every Massachusetts estate plan is unique. Estate plans represent an individual’s goals and wishes, so no two estate plans will look the same. Nonetheless, most estate planning mistakes fall into one of a few different categories. As with other aspects of one’s life, knowledge is power. Understanding common estate planning mistakes will help you avoid making them. Are you concerned about your retirement plan or estate plan? If so, the estate planning team at Surprenant & Beneski, PC, can help you avoid these estate planning mistakes.
1. Not Updating Your Documents After Big Life Changes
Many people assume that as long as they have a will in place, they won’t need to update any information related to estate planning. However, many assets have separate beneficiary forms. For example, most retirement accounts include a form in which the owner designates a beneficiary. An account owner may choose to name his wife as the beneficiary of his retirement account. When he passes away, the retirement account will transfer automatically to his wife.
Couples who’ve undergone a divorce or re-marriage often forget to change their beneficiary designations. Even if you create a new will that reflects your life changes, you may have forgotten to complete new beneficiary designation forms. As a result, assets often go to ex-spouses, the estates of another deceased person, or another unintended beneficiary. Perhaps you got married after you signed up for your retirement account. You may have named your parents or a friend as the beneficiary when you signed up for the account, not your spouse.
Similarly, it’s easy to forget to update your power of attorney documents. Every comprehensive estate plan should contain powers of attorney documents. If you’ve received a medical diagnosis, or you’ve experienced a significant life change, updating your power of attorney document can be beneficial. Your wishes may have changed in light of new information, or you may wish to appoint another person as your attorney-in-fact.
2. Failure to Coordinate Your Retirement Plans with Your Trusts
Many estate plans include living or irrevocable trusts. By creating a trust, estate planners can designate beneficiaries of the trust. They transfer their assets into the trust and trustees manage the trusts according to the terms of the trust agreement. Using trusts can help you avoid tax liability. However, if you use the wrong type of trust for your estate plan, you can end up incurring more taxes.
For example, if your goal is to use a see-through trust to defer taxes on a retirement account, the trust must include specific language. Massachusetts estate planning law recognizes many different types of trusts. Each type of trust can serve a unique function as long as the trust agreement is well-written with the precise language needed to meet your goals.
3. Not Understanding Your Estate Plan
Estate planning is extremely complicated. Many people feel like they do not adequately understand their estate planning documents. Sometimes estate planners don’t understand their plan or what they may need to do to implement their plan after they visit an estate planning office. Understanding the fundamentals of your estate plan is essential.
At Surprenant & Beneski, PC, our legal team is client-focused. All of our estate planning lawyers take the time to help clients understand the ins and outs of their unique estate plan. We love answering questions and assign each client to a case manager who makes sure they feel like we’ve met their needs, and responded to questions. We want our clients to leave our offices feeling confident in their estate plan. Contact our law firm today to learn how we can help you with your estate planning needs.