No matter your age, health, or life circumstances, it’s never too early to think about estate planning.
When drafting your estate plan, you’ll want to make sure you cover all your bases. Here are some commonly overlooked items to consider when creating yours.
When drafting an estate plan, many people focus solely on what happens to their assets when they pass away. However, it’s also very important to plan for incapacity and consider what might happen if you were physically or mentally unable to make decisions for yourself. In this case, you’ll want to appoint someone you trust to serve as your agent under a Durable Medical Power of Attorney and Living Will (for medical and end of life matters) as well as a Durable General Power of Attorney (for financial matters), so that this person can protect you and your assets when you are temporarily or permanently unable to do so yourself.
2. Asset management for minor children
If you have minor children, you’ve likely considered who you might designate as their legal guardian if something were to happen to you and/or their other parent before they reach adulthood. However, it’s also important to think about the management of any inheritance or assets they would receive in the event of your premature death.
A revocable living trust can be a handy estate planning tool for protecting your minor children’s inheritance by ensuring it is managed by an appropriate trustee until your children are mature enough to manage it for themselves. It also ensures that your estate does not end up in the hands of someone else should the child inherit from you outright.
3. Digital assets
As our lives become increasingly digital, many of our assets exist online. However, many estate plans fail to consider digital assets like photos and videos, emails, social media accounts, documents, and more.
It’s important to authorize your agent under your financial power of attorney or your executor under your Will or your trustee under your Trust to handle all of your accounts, including setting up a new user ID or password for such accounts, rather than having to write that private information down and constantly have to update it. Of course, making a list of what accounts you have, so that these individuals know what needs to be protected is extremely helpful even after you sign your estate planning documents, and you should periodically update it if your accounts change.
4. Divorce protection
While you didn’t enter your marriage with a plan to eventually get divorced, you’ll want to prepare for anything when drafting your estate plan. This means protecting your assets in the case of separation or divorce from your spouse. Though you might plan to distribute your assets to your spouse, understand how a divorce will affect or change your estate plan.
5. Updates/changes that impact your estate plans
Estate planning is not a one-and-done effort — there are many life changes that can impact your estate. To ensure your estate is ready for anything life throws at you, frequently revisit and update your plan to accommodate such changes. For example, family deaths, births, divorces, etc. are all potential game-changers in estate planning. Periodically review your estate plan to ensure your wishes are still relevant. Make sure you understand what assets will, in fact, be controlled by your estate planning documents and which will not.
6. Ever-changing tax exemptions
Tax exemptions can impact your estate and its heirs, particularly around lifetime gifting. If you have significant wealth or expensive properties, review your tax exemption options each year to lessen any potential financial burdens.
7. Seeking expert guidance
Rather than consulting with a professional, many individuals try to save money by drafting their estate plans on their own. However, doing so could mean you miss out on potential tax exemptions, fail to protect your assets, or overlook any of the above elements.
Estate planning is a challenging process, and working with an expert can help you avoid potential issues along the way. The Law Office of Patricia E. Tichenor has 20 years of experience handling estate planning matters for Virginia residents.
If you need help drafting your estate plan, we can guide you and your family through the process. Contact us to schedule a free consultation about your estate planning needs.