Despite the fact that the overwhelming majority of people understand how important an estate plan is, over half of all people have yet to create an estate plan. While the wealthy are more likely to have created an estate plan, they are far from exempt from making estate planning mistakes. Some of the more common mistakes the affluent make when it comes to estate planning include:
- Coordination – the more money you have the more advisors and consultants you are likely to have to help you manage, invest, and protect that money. Do not make the mistake of fragmenting your planning. Make an effort to coordinate your financial advisor, estate planning attorney, and anyone else necessary to create a cohesive estate plan.
- Communication – while you don’t have to share all the minute details of your estate plan, telling your family and loved ones what your overall plan is may decrease the chance of conflict when the plan actually goes into effect.
- Gifting – for a wealthy estate, lifetime gifting is almost always necessary to avoid paying exorbitant sums in estate and gift taxes.
- Trusts – don’t underestimate the power of a trust. Along with tax and probate advantages, a trust can afford you the opportunity to retain a certain degree of control over your assets and the behavior of your loved ones long after you are gone.
- Updating— don’t just create an estate plan and then forget about it. As you have major changes in your life – births, deaths, marriages, divorces, inheritances – you should also review and update your estate plan.
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