After the recent phasing out of New Jersey's estate tax, some believe there is no real incentive to create an estate plan. However, avoiding estate taxes is only one reason to create an estate plan or even to write a simple will. Expressing your wishes may reduce confusion for your heirs and ensure your assets reach the hands you want them to reach.
If you have taken the step to create an estate plan, you certainly want to do everything you can to ensure your efforts are not going to waste. You can do this by checking to see if you have made any of the most common mistakes people make in estate planning.
Protecting your estate and your plan
Dying without a will is one of the most serious mistakes a person can make when it comes to estate planning. This may be especially true if you have people outside your family whom you wished to include in the distribution of your assets or those within your family you intended to exclude. A simple will can clarify your wishes, name proxies for your finances and health care and appoint someone you trust to make decisions in your name if you become incapacitated.
In addition to neglecting to write a will, there are other mistakes you might make that will frustrate your estate planning efforts, including these:
- Failing to include a transfer-on-death beneficiary on accounts that a will does not cover
- Neglecting to address obsolete estate planning designations following divorce, remarriage or the death of a spouse
- Hesitating to reveal the true status of your estate and finances when you meet with your estate planning attorney
- Forgetting to review and revise an estate plan after major life events such as the birth of a child, the death of a beneficiary or a move to another state
Another critical mistake some make is to rely on printable documents from do-it-yourself websites or to write their own will by hand. While these may seem economical and effective, in reality, if you are not certain about the language to use to make the document clear and concise, your will may create more confusion than you anticipated. Additionally, without experience in executing a will, the chance that you will do so incorrectly may result in an invalid will.
State laws change frequently, as evidenced by the recent change in New Jersey's estate tax, and having a legal professional walk you through the process of planning your estate may be the best gift you can give to yourself and your loved ones.