Wichita Estate Planning Attorney Offers 7 Tips for Avoiding Estate Planning Errors [part I]
Effective estate planning involves careful financial planning, artful crafting of legal documents, and skillful implementation of legacy succession strategies. Many attempts to mitigate the depletion of financial legacies have less than desirable results because people fail to seek legal advice from an experienced Kansas Estate Planning Lawyer. When individuals attempt to construct an estate plan, they can benefit from an experienced professional who will consider the full spectrum of potential issues, including but are not limited to the following:
Avoiding probate
Minimizing tax liability
Carrying out legacy succession intentions
Reducing estate administration costs
Preserving financial resources for beneficiaries with issues related to youth, irresponsibility, and/or liability issues
Providing health care advance directives
Nominating guardians for minor children
Discouraging costly challenges to trusts and wills
These are merely a handful of important considerations that must be taken into account when developing an estate plan. Given the many factors and issues involved in the estate planning process, there are certain types of mistakes that often undermine an estate plan. In this two-installment blog post, Wichita Estate Planning Lawyer J. Joseph Weber has provides an overview of frequent estate planning missteps.
Error #1 Failure to Provide Sufficient Liquidity
When people use online websites, computer software, DIY guides, so-called paralegals, or typing services, the focus tends to be solely on document drafting without consideration of implementation issues. Miscalculations regarding the broad range of expenses associated with the administration of an estate plan can interfere with the process and create challenges for beneficiaries and heirs. Many people without legal representation also are caught off-guard by how quickly these expenses must be handled after an individual passes away.
When proper arrangements are not made regarding liquidity of assets, the person handling the affairs of the estate and/or individuals inheriting under the estate plan might be compelled to sell assets at a substantial loss. Assets that might need to be terminated include high income generating real property, the most valuable assets, and/or controlling interest in a family business. Potential costs that should be considered when determining liquidity needs include:
Federal income tax (including IRS liability for pension distributions)
State include tax (including tax obligations related to pension distributions)
Capital to permit continued operation of an ongoing business
Living expenses and funds to promote the welfare of surviving family members
Expenses associated with administration of an estate and/or probate costs
State death tax
Generation-skipping transfer tax
Satisfaction of debts of the estate
Federal estate taxes
Distribution of distinct cash bequests
Since no two estates or sets of family circumstances are identical, there is no guarantee that an individual will incur all of the expenses above. However, the lion-share of large estates will incur most if not all of these expenses.
Readers who want to avoid estate planning mistakes are invited to read Part II and Part III if this blog series. If you have questions about estate planning, estate administration, or the probate process, we welcome the opportunity to talk to you and answer your questions. We invite you to call the Kansas Estate Planning Lawyer at the Weber Law Office or to submit an inquiry form through this website to schedule your initial consultation.