Common estate planning mistakes

There are many common estate planning mistakes that people make. Reliance on these preconceptions can result in increased costs, time and aggravation to those who are or will be involved in the management of your financial well-being and health care.

The most common of these are:

  • Simple is good, simplistic is better.
  • Estate planning has to be started only once you are fully retired.
  • Estate planning is all about what happens after someone dies.
  • My attorney knows what my accountant and financial planner are doing.
  • You can rely on Congress to leave the estate tax code alone.
  • It is always a good idea to name your family members as decision-makers (either by birth order by gender preference) for all financial and health care matters.
  • I can still sign for my high school children even though they turned 18 years old.
  • Wills avoid probate.
  • A power of attorney can be used after someone dies.
  • All financial institutions will honor/accept the power of attorney.
  • A living trust is only for those who are wealthy.
  • Life insurance is tax free.
  • Adding family members as joint owners is a safe way to avoid probate.
  • Being married automatically doubles the estate tax exemption amount.
  • I don’t have to fund my living trust but can still avoid probate.
  • I’m married so I don’t need an advance directive.
  • Leaving an inheritance to someone receiving assistance benefits (i.e. Medicaid) isn’t subject to spend-down rules.
  • Helping my children or grandchildren is gift tax free.
  • Leaving wealth outright to children at age 18 or 21 is better than setting up age-appropriate distributions.
  • Internet or stationery document forms (the actual documents – not intake forms) save time and money.