Leaving a legacy after death is the main goal people have when establishing wills, trusts and other financial instruments that will outlive them. However, there is no such thing as a perfect estate plan, and each tool does not necessarily meet the wishes of the testator. Many Pennsylvanians do not get to estate planning until later in life, which could prove to be a mistake.
Starting an estate plan can never be done too early because anyone with substantial property and children should address the inevitabilities of death. The plan should also address the possibility of incapacity, usually by establishing power of attorney so that a trusted party can make financial and health decisions on your behalf.
Drafting a will and keeping its provisions secret can damage relations between heirs after you die, so make sure your plans are known and clear to everyone. Talking about plans may produce some anger and disappointment, but it is better to deal with those while you are alive.
Avoid leaving a lot of cash to relatives or heirs. Think about the needs of heirs in the long run, especially if they are not capable of managing their finances, something that is frequently the case with minors. A trust with a competent trustee who will manage the money may be a better approach.
Address estate taxes straightaway. Inheritance tax exemptions are substantial, but even for people who so much money that inheritance is an issue, it may be wiser to pass on the inheritance while still alive through gifting or by establishing a trust.
Remember, life is unpredictable. Because an estate plan will be enacted as written once you die, consider and address any significant life and economic changes as they occur. It is often best to review an estate plan on a regular basis.
Source: Business Insider, “5 Common Estate Planning Mistakes To Avoid,” Mandi Woodruff, Oct. 21, 2013