Many people living in Minnesota understand the importance of an estate plan. Unfortunately, simply writing a will is often not enough to protect a person’s interests or the well-being of his or her family.
One of the most common errors in estate planning is failing to designate beneficiaries of retirement accounts, insurance policies and other financial products. Another common error is to not update beneficiary designations as circumstances change. For example, somebody might name a spouse as a beneficiary on an insurance plan but then later divorce that spouse. If the policy is not updated, the ex-spouse will become the beneficiary, regardless of the estate planner’s current marital status or personal desires.
Another common mistake is to attempt to avoid taxes by selling property for less than its market value to family members. However, tax law has caught up with this dodge, and a family member who purchases real estate or other property at a very low price may well be taxed on the value of the difference between the price paid and the property’s appraised value.
It is also important for estate planners to update lists of investments over time. For example, if an estate planner designates that shares of a particular stock should be left to a beneficiary and dies after selling the stock but before updating the will, the estate may be responsible for repurchasing stock at a higher cost, possibly depleting the estate.
Individuals who are concerned about estate planning and probate issues may benefit from speaking with an experienced attorney. The lawyer may be able to review the client’s current circumstances and make recommendations as to creating and updating an estate plan.