We recommend that you revisit your estate plan every three years to ensure it still makes sense for your current situation. Below are a list of common mistakes that may arise from outdated estate plans.

1. Forgetting to update beneficiary designations

Payable-on-death beneficiary designations that you have set up for your bank accounts, retirement accounts, life insurance policies, and investment accounts pass directly to the named beneficiary on the account.

For example, if you only have one of your children named as the beneficiary on your savings account, but your will or trust states that you want everything to be equally distributed amongst your three children, then you may have an unintended consequence. That bank account passes only to your one child named as the beneficiary on the account and that child is under no legal obligation to equally split the savings account inheritance with his or her siblings. You should make sure that you know who the current beneficiaries are on each and every one of your financial accounts and consider whether those beneficiary designations align with your intent.

2. Your children are now adults

If you created your estate plan when your children were minors, but now your children are adults, your estate plan should be updated. Are your adult children financially responsible? Does your plan account for potential or current grandchildren? Should you consider giving your adult children medical or financial power of attorney?

Alternatively, if you have minor children, have you nominated a guardian for those minor children in your Will? Parents should also consider how their assets would be managed for their minor children if neither parent are living. If you created a trust that holds a beneficiary’s inheritance until the beneficiary turns 30, you should consider whether your trust provides flexibility for that beneficiary to use any part of their inheritance before the age of 30 for things such as a down payment on a home, college tuition, or even unexpected medical expenses.

3. Was your estate plan created under outdated tax law?

Under current law, the estate tax exemption allows individuals to transfer assets under $15 million with no federal estate tax. However, states may have lower estate tax thresholds. Additionally, the estate tax exemption has significantly increased over the past few decades. Depending upon the state your estate plan was drafted in and the estate tax exemption amount at the time it was drafted, your plan may contain complex or unnecessary tax structures.

These structures could result in your plan unnecessarily requiring the creation of separate credit shelter trusts upon your passing. You should ensure that you understand if separate trusts are required to be funded and created upon on your death, who would be the one responsible for managing those separate trusts, whether your beneficiaries are entitled to an inheritance outright or only under certain conditions, and if there is any benefit to the current structure of your plan.

4. Changes in Residency

Each state has its own estate planning laws, requirements, definitions, and as mentioned above – estate tax exemption amounts. Wisconsin is considered a marital property state. If your estate plan was drafted in an individual property state and you now live in a marital property state such as Wisconsin – does your plan make sense under Wisconsin law?

Powers of attorney also use state-specific definitions and procedures. The powers of attorney may limit or fail to grant power of attorney agents the powers they may need to assist you if you are unable to act for yourself. Think of the type of assets you own and whether your power of attorney grants your agent the power to manage or handle those assets.

5. Overlooking how real estate will transfer

Real Estate often represents a substantial portion of a family’s wealth and requires careful consideration. The way title is held for your real estate is of substantial significance. Do you know what your deed says for ownership? Does your ownership contain survivorship benefits? What happens when all owners of the property pass away? Is there a Transfer on Death Deed in place?

It is important to realize that a Transfer on Death Deed may not eliminate every potential issue associated with inherited real estate, especially if the property is being transferred to multiple people upon your passing. Consider whether you would like your trust to hold ownership of your real estate and if so, what powers your trustee has with regard to the real estate. If you own multiple parcels of real estate, especially out-of-state property, make sure your estate plan accounts for those properties as well.

Protect your family with thoughtful estate planning and schedule a consultation with Wynn at Law, LLC today 

A comprehensive estate plan can help ensure that your assets are distributed according to your wishes, help avoid disputes, and grant power to your loved ones to make important decisions if you become incapacitated. But, effective planning involves more than just preparing a will or a trust. It requires coordinating your beneficiary designations, property ownership, and consideration of unique family circumstances. It also requires updates over the course of time.

For assistance with creating or reviewing your estate plan, contact Wynn at Law, LLC today for a consultation at 262-725-0175 or visit our website’s contact page. Wynn at Law, LLC is based in Southern Wisconsin and has offices conveniently located in Lake Geneva, Wisconsin.

Wynn at Law, LLC helps you tailor your estate plan to your specific goals and circumstances. Whether you have an estate plan already in place or are starting from scratch, our attorneys can assist with ensuring that your estate plan makes sense for you and your family.

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