We know that losing someone is a very emotional moment. Along with dealing with those feelings, there are numerous practical matters and legal documents to handle. One thing you might have to deal with is probate, the legal process of administering someone’s estate after death. Unfortunately, navigating the probate process can have some difficulties that, if not carefully avoided, can lead to delays, disputes, and added stress.
One of the gravest errors individuals make is underestimating the importance of estate planning. Many people believe that estate planning is only for the wealthy or elderly, but that’s not the case; managing finances and legal affairs is essential for everyone. Taking time to craft a comprehensive estate plan involves incorporating wills, trusts, and powers of attorney. This way you can ensure that your assets are distributed according to your desires and provide clarity for everyone involved, and of course, avoid unnecessary expenses.
- Not updating your plan regularly. Life is unpredictable, and circumstances can change in an instant. Yet, many individuals neglect to revisit their estate plans to account for major life events such as marriage, divorce, births, or deaths. We have seen families that have set up a trust but end up in probate anyways because the trust has not been properly funded.
- Overlooking beneficiary designations. Certain assets, such as retirement accounts and life insurance policies, pass directly to designated beneficiaries outside of probate. If these designations are not updated to reflect your current intentions, assets may end up in the wrong hands or cause conflicts among heirs. A big no-no in this area is to name minor children as beneficiaries.
- Incomplete, inaccurate or non-valid documentation. Probate requires meticulous documentation, including death certificates, asset inventories, creditor notifications, and legal filings. Failing to prepare these documents properly can lead to delays, disputes, and additional expenses. Also, with the boom of technology, we see more and more people relying on online legal technology programs to prepare legal documents. Many times, the documents they craft will not fit with their needs causing more problems that providing solutions.
- Neglecting to consider tax implications. Estate taxes, inheritance taxes, and income taxes can all diminish the value of assets passing through probate. This can result in significant financial consequences for your heirs. A common mistake we’ve seen is that families make gifts during life without filing Gift Tax Returns, IRS Form 709. Also, we see people transferring properties in life missing on a great tax benefit, step-up in basis; when the price of an inherited asset on the date of the decedent’s death is above its original purchase price, the code allows the heirs to take the property value at the time of death as the heir’s cost or basis; that is a great benefit when it’s time to sell the property because capital gain taxes will be lower.
- Weak Communication. Lack of communication among family members can breed misunderstanding and conflict. Openly discussing your estate plan and intentions with your loved ones can help mitigate tensions and ensure that your wishes are understood and respected.
- Procrastination. Delaying probate proceedings can prolong the resolution of your estate and increase costs for your heirs. Initiating probate in a timely manner allows for the efficient administration of your estate and timely distribution of assets to beneficiaries
Navigating probate requires foresight, planning, and attention to detail to avoid mistakes. Working with an experienced estate planning attorney can help ensure that all necessary documents are in order and properly filed, all your wishes are written down and your mind is clear of all the unnecessary stress. If you want to avoid probate and set up your Estate Plan now schedule a 15-min free call here.
