While many people know the value of estate planning, only one in three Americans has a will. For most people, the number one reason for not having an estate plan is that they simply haven’t gotten around to it yet. Neglecting to plan for the future can have unexpected and undesirable consequences for your family. An estate plan can ensure that your loved ones are taken care of in the event of your death or incapacity.
Proper estate planning means your family can manage your estate and household while coping with your death or illness. In this blog, we will explain why estate planning is so important and discuss the most common estate planning mistakes to avoid. Whether you’re just starting your family or have been putting off creating an estate plan for years, you can benefit from working with an attorney who knows how to craft a plan that is tailored to your unique circumstances and preferences.
Why You Need an Estate Plan
An estate plan is a collection of legal documents that serves several important purposes, including:
- Planning for who will own your home, car, and other assets after you die;
- Explaining your wishes for health care in an emergency or at the end of your life;
- Naming who will handle your affairs and maintain your finances if you can’t do so for medical reasons; and
- Appointing someone to make medical decisions on your behalf if you can’t express your wishes because of your condition.
Talking about these topics isn’t comfortable for everyone. Still, taking the time to plan will save your family from stress and conflict. When you have a plan in place, your family can take time to understand your wishes and enter the situation prepared for what might happen.
Top Estate Planning Mistakes from a NY Attorney
At the Law Office of Andrew M. Lamkin, P.C., we recognize how important estate planning is to secure your family’s future and stability. Creating an estate plan can get complicated quickly. When it comes to wills and other estate planning documents, making mistakes is easy. And these mistakes can be expensive and time-consuming for your family to fix. That’s why we want you to know about the most common estate planning mistakes and how to avoid them.
1. Not Having an Estate Plan
As mentioned above, an estate plan is a document or collection of documents that clearly state how you want your property distributed. Although there are a few legal requirements you have to meet, not having an estate plan can be much more complicated and costly for your family. When a person dies without a will, their estate will pass to their family according to New York’s intestate succession law. For many families, this means the decedent’s spouse and children divide ownership of the estate. That might work for your family, but if you have other preferences, these default rules will probably not meet your needs.
2. Not Working with an Attorney
Online estate planning services, tools, and templates are everywhere these days. They can work for some people in limited circumstances, but they can’t answer questions or address specific needs. When you meet with a Long Island estate planning attorney, they will be able to craft a plan that is tailored to your unique situation and goals. Online tools can also cause problems if the documents they provide are not compliant with or kept up to date with New York law. An attorney will understand the latest developments in estate planning law and policy, so your estate plan will work how you want it to and remain enforceable.
3. Not Planning for Estate Taxes
When your estate reaches a certain financial threshold, estate taxes to New York State and the federal government must be paid. An estate plan that ignores a potential tax bill can deplete your estate’s value. On the other hand, a strategic estate plan can reduce or eliminate taxes, saving that value for your loved ones to inherit.
3. Forgetting to Update Your Beneficiaries
If you have a life insurance policy, retirement, or investment account, you likely named a beneficiary when you opened the account. You may need to update your beneficiary designations if you don’t review them regularly. For example, many young adults name their parents on their 401(k) when they start their first job. Or, your beneficiary may still be your former spouse if you have divorced.
4. Not Thinking About Qualifying for Medicaid
As you age, you may need to qualify for Medicaid to cover the cost of a home health aide or nursing home care. Estate planning means considering gifts and transfers with Medicaid eligibility in mind. As a needs-based program, Medicaid has eligibility limits on assets and income. If you make certain gifts or asset transfers, it can impact your eligibility for Medicaid. Estate planning can help you structure your assets and income to preserve your Medicaid eligibility while also protecting your assets.
5. Not Communicating with Your Family, Beneficiaries, and Executor
To ensure the best results, you should openly discuss your estate plan with your family and beneficiaries and keep them informed of any changes. Failing to communicate information about your estate plan can cause confusion and conflict among family members and beneficiaries. Your estate may complete unintended distributions if your named executor doesn’t follow or understand your wishes. Not sharing the plan can also cause longer, more complicated probate proceedings, which can be costly and time-consuming for your family. Open communication and regular updates can avoid misunderstandings and ensure that your estate plan works as you intended.
Secure Your Legacy with the Law Office of Andrew M. Lamkin, P.C.
Andrew M. Lamkin has been helping New Yorkers plan for the future since 2007. He handles all cases personally and has experience in estate tax liability, probate, advanced directives, veterans benefits, and special needs planning. Regardless of your estate size and goals, he can help you develop a solution to preserve your assets and provide for your family. With Andrew’s knowledge of New York estate and trust law, you can rest easy knowing your family has an efficient, enforceable plan to follow after your death or incapacitation. Contact the Law Office of Andrew M. Lamkin, P.C., so that Andrew can help you secure your family’s future.