Many people mistakenly believe they do not have to worry about their estate planning. After all, young, healthy individuals without much in the way of finances often think about establishing themselves more before they sit down and think about the end of their lives as older adults. Unfortunately there are many mistakes that this line of thinking can lead to.
Even as a healthy young adult, you likely have things you care about and potentially some money in a 401k or IRA account that would transfer hands if you were to pass away. Estate planning is not just for the rich. On the contrary, it is for everyone that has any assets they wish to bequeath to another after their passing, even if those assets are not significant.
When you trust the team at May Herr & Grosh, you will work with an estate planner lawyer in Lancaster, PA, that understands the nuances of PA estate law and can help you thoroughly plan your estate and what will happen to it after you pass away. Learn more about the common mistakes we see when helping our clients prepare their estate.
1. Lack of Planning for Minor Children
Many young people fail to appreciate what a proper estate plan can accomplish if they have any children who are minors. Through your will, you can designate guardians to look after the physical well-being of your minor children if you pass away. Moreover, your will can establish trusts or provide for similar options so that any money a minor beneficiary receives can be looked after properly by competent adult.
2. Outdated Paperwork
Another common mistake people make when they plan their estate is neglecting to update their paperwork over the years. While you may already have a will and other estate planning documents, it is essential to keep them updated because the laws governing your estate planning documents can change. Further, life events, like the birth of a child or the death of a spouse, should trigger changes in your estate planning paperwork. Reviewing your estate plan with a lawyer is the best step to ensure your estate planning is up to date.
3. Making Unclear Beneficiary Designations
Having clear beneficiary designations and outlines for what you want to happen for the gifts you’re bestowing on them will ensure your estate is distributed exactly as you intend, without any room for misinterpretations. It is essential to use clear language in your estate planning to ensure there is no confusion. The attorneys at May Herr & Grosh can help you make sure that your intended beneficiaries are clearly and adequately identified. This includes situations where even beneficiaries who haven’t been born yet can be included in a gift. Any ambiguities as to who is supposed to be a beneficiary could lead to stressful and costly litigation.
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4. Disregarding Future Disability or Long-Term Care Needs
Estate planning does not only apply to your will. As you grow older, you will likely need some more involved healthcare if your health starts to fail, and you may become unable to make decisions for yourself. Further, a disability may leave you incapable of your everyday functions or unable to perform your job as well as you could before the disability. That is where Powers of Attorneys come in handy. Through this document, you can name someone as your agent to sign checks, pay bills, make medical decision, and stand in your shoes legally to do things you are no longer capable of.
5. Excluding the Consideration of Taxes
After your passing, parts of your estate will be subject to taxes. Each state has its own laws surrounding inheritance taxes, and federal taxes are to be expected as well. Keeping this in mind while you plan your estate can help you decide what you are doing with your money or assets before you pass away. Sometimes, you may wish to make cash gifts to your heirs. The attorneys at May Herr & Grosh can help ease your mind and ensure your heirs are in the best position possible when your assets are distributed.
- Income Taxes- Depending on your heirs’ tax situation, you may be adding more headaches to their lives than helpfulness by leaving them with assets such as an IRA or a 401(k). Your estate planning lawyer and accountant can help you determine the best avenue to deal with these assets.
- Estate Taxes- Federal estate are not currently applicable to many estates because the applicable credit against them is quite high. However, that and similar credits change over time, so keeping up with new estate tax laws can help you ensure that your plans are carried out as you wish. The lawyers at May Herr & Grosh can review these tax laws with you and keep you up to date.
6. Making Children Joint Owners of Your Assets
Some people mistakenly believe that they can avoid taxes or other financial responsibilities by making their children joint owners of their assets. Instead of this being a benefit, it ends up endangering the future of your estate, especially if you are in good health and are planning a retirement funded in any part by your estate.
First, there potentially adverse tax consequences to your children by gifting them a joint ownership in your property, especially if this is an asset that has appreciated since you came in possession of it. Second, when you add your children as joint owners, you lose a bit of control of that property. This could be a big problem if you are relying on that asset being available to help take care of future expenses, medical or otherwise.
7. Not Consulting with An Estate Planner Lawyer in Lancaster, PA
One of the most common mistakes people make in PA estate planning failing to consult with an experienced attorney. While you may meet with accountants and other professionals for help with your estate planning, working closely with a lawyer is the only way to ensure the language in your plan is clear and direct, up to date, and designed to carry out your intended plans. The lawyers at May Herr & Grosh have the experience and skill to help you navigate these sometimes perilous waters safely.