When – or if – people prepare for their death or disability, they often are unaware of the five common mistakes people generally make. A well-written estate plan helps you avoid those five mistakes. What are they?
Mistake 1. Loss of control. Surprisingly, disability is more likely in the short term than death, so you also need to address what happens if you become disabled and cannot make medical or financial decisions. Do not assume that your spouse can make all of those decisions for you; your spouse cannot access your retirement accounts or any assets just in your name. Thus, you need to have appropriate documents in place.
Mistake 2. Loss of access. When you die, at what age will your children get their inheritance, and who will control it? Without a plan, your family must follow the government’s rule book, not yours.
Mistake 3. Loss of assets. People often say they were told to give their assets away to family members, for tax reasons or Medicaid reasons. However, that strategy can be a disaster. What if those family members get divorced, go into a nursing home, or are in a car accident? Tax laws are not the only things to consider. Long-term care planning, paying for long-term care, and Medicaid qualification are major threats. It is critical to understand how tax and asset protection laws integrate.
Mistake 4. Unqualified professionals. Just as you would go to a cardiologist for a heart condition, it is important to work with a Certified Elder Law Attorney certified by the National Elder Law Foundation to plan your financial future. Certified Elder Law Attorneys have undertaken hundreds of hours of specialized training in numerous elder law areas, and have passed an extremely difficult exam. Many professionals, while believing that they are acting in your best interest, are often not aware of the intricacies of elder law. Certified Elder Law Attorneys are trained to deal with the complexities of aging and protecting your assets.
Mistake 5. Increased cost without pre-planning. Often people focus on the short-term cost of preparing documents, but ignore the additional cost at death. Understanding the cost of not doing something properly now, and how much it can affect your family, should weigh heavily in your decision-making. The law is complicated, but working with qualified professionals does not have to be.