The preparation of an estate plan often makes it easier for one’s family to deal with the aftermath of his or her passing. As a recent article points out, however, sometimes estate planning errors can cause an estate plan to have the opposite effect. It is therefore important to review your estate plan for errors now, as small errors can cause large problems once it is too late.
One major problem with estate plans is that, after the decedent passes, his or her heirs discover that the plan is cash-deficient. Most often, this occurs because many modern estates include transfer-on-death accounts, joint accounts, and accounts with beneficiary designations. Although these types of accounts simplify the distribution of assets, they leave the executor with little or no assets with which to pay creditors and taxes. When estates are cash-deficient, the estate beneficiaries often have to make up the difference.
Another major problem with many estate plans is that people often fail to plan for contingencies. When naming your beneficiaries, consider what you would like to happen should one or more of your named beneficiaries predecease you. This is a major pitfall of most do-it-yourself wills, which do not account for contingencies.
Finally, communication is key to a working estate plan. Regardless of the size and complexity of your estate, things can go catastrophically wrong when you do not communicate the details of your estate plan with your beneficiaries.
