When was the last time you revisited your estate planning? Chances are, it was when you signed a stack of documents at your attorney’s office. Many individuals create an estate plan and then forget about it for years, which is a common mistake in estate planning strategies.
It is crucial to review your plan regularly due to changes in laws and significant life events such as marriage, birth, divorce, or the death of a family member. Updating your estate plan every 3 to 5 years is recommended to ensure compliance with current laws and regulations. In this article, we will explore the reasons why many estate planning strategies fail during the probate process.
Issues with Fiduciaries
An executor or fiduciary is someone appointed to manage another person’s estate legally. It is their responsibility to act in the best interests of the beneficiaries. Therefore, selecting the right individuals to represent your estate in court is essential during estate planning. Failure to do so can lead to complications in the probate process from the outset.
Most people appoint executors in their wills, granting them control over the estate during probate until the assets are distributed to the beneficiaries. Executors are responsible for collecting the deceased’s assets, paying debts and expenses, and filing any estate tax returns.
A trustee, on the other hand, manages the assets held within trusts. While an executor’s role is typically temporary, a trustee may serve indefinitely or until the trust terminates. Distributing assets to beneficiaries while adhering to the trust agreement is a critical aspect of the trustee’s responsibilities.
Overlooking Children’s Growth in Estate Planning
When children are young, parents often designate guardians for them in their estate plans. However, as children grow into adults, the need for a guardian may no longer exist. Failure to update the estate plan to include new family members, such as spouses or children, can lead to complications and the failure of estate planning strategies.
Trusts created for children under 18 may become obsolete as they reach adulthood and no longer adhere to the trust’s rules. Outdated estate plans may not align with current circumstances, such as one child being financially stable while another is not, leading to unequal distribution of assets among siblings.
Neglecting Recent Wealth Accumulation in Estate Planning
Financial security is a common goal for individuals, but accumulating wealth can introduce complexity. An increase in wealth often results in higher annual taxes and may impact estate value and future estate taxes. Failure to update the estate plan to reflect recent wealth accumulation can render the plan ineffective and disregarded by the court.
If the estate plan only includes previous assets and does not account for new wealth acquired over the years, it may not align with the deceased’s current financial situation. Updating the estate plan regularly is crucial to ensure that it accurately reflects the individual’s assets and intentions.
In Conclusion
Estate planning should not be a one-time event. Regularly updating your estate documents every two to three years is essential to avoid complications during the probate process. It is important to anticipate unforeseen circumstances and be prepared to address any outcomes that may arise. If you require assistance or guidance, consider consulting a probate lawyer to ensure that your estate plan is comprehensive and up-to-date.
