WMUR.com's recent post, "Money Matters: Common estate planning mistakes," says that regardless of how easy or difficult you think estate planning may be, it's important to review your wishes and have the proper documents prepared to ensure they are followed at your death. In this post WMUR.com shares a few of the most common and potentially costly mistakes, along with suggestions on how to avoid them.
Failing to plan. Many of us don't have a will—but like it or not you do have an estate plan. The plan is called the law of your state and the probate judge. If you die without a will, your estate will be divided according to intestacy laws. In that case, there's no guarantee this will be what you wanted. A one-page will or a more complex plan with other strategies like a trust can help reduce estate taxes, save on administrative costs, and put you in the driver's seat when deciding how your assets are to be distributed to your heirs, charities, or to help a family member with special needs. Another important point: in many states a will is the only way that you can name a guardian for your minor children. So, if you move from one state to another, be sure to check local laws.
Failing to maximize your marital estate exemption. The new portability law provisions ease some of the estate tax planning burden by allowing each individual a $5.43 million federal estate tax exemption in 2015. If one spouse dies without using up his or her $5.43 million, the unused portion may be transferred to the other spouse for use at the survivor's death (hence the term "portable."). You should also remember to investigate any state estate taxes when reviewing your strategy and make certain to discuss how portability is elected with your attorney.
Naming a relative as executor or trustee. Your executor is the individual or company responsible for administering your estate after you die. It's a big responsibility, so this person needs to take the job seriously. A loved one may be too emotional to focus on this task, and there can be conflicts if the executor is also a beneficiary. You might consider using a professional along with the family member. This can save you both time and money. Talk to your estate planning attorney.
Relying on advice from family or friends. Your brother's kid may be a first year law student with all kinds of enthusiasm, but you need to work with an experienced estate planning attorney.
Estate planning is a "must do." You need to be prepared and have your legal documents in place to give your loved ones peace of mind, knowing that things will occur as you wished upon your passing. Everyone's situation is unique. Talk with an estate planning attorney to help you review your needs. And remember that estate planning is not done once—you must review your plan periodically for changes in your life.
Reference: WMUR.com (December 10, 2015) "Money Matters: Common estate planning mistakes"