Strengthen a Colorado estate plan by avoiding these common mistakes

Estate plans are one step towards financial security. Knowing these common mistakes can help you set up a plan that is more likely to meet your needs.

Putting together an estate plan is an important step towards financial security. The legal documents used to make each plan can be tailored to meet each individual's wishes and help the owner take advantage of various tools available to reduce the tax burden associated with transfers.

Not taking tax implications into consideration is just one potential mistake that can occur when putting together an estate plan. Some additional, common estate planning mistakes include:

  • Leaving it up to the state. Those who do not establish an estate plan leave the transfer of their assets up to state law. A will allows one to control how assets are distributed. Additional tools like trusts can also be valuable additions to an estate plan. A recent article featured by CNBC notes that revocable trusts can be valuable tools for everyone, not just the rich. These legal tools allow the estate to transfer in private, avoiding a costly and potentially arduous public probate process.
  • Establishing an estate plan, than forgetting it. Estate plans should be updated with every major life event. Marriage, divorce, death or the birth of a child are all reasons to revisit and update an estate plan. It is wise to review the plan once every five years in the absence of these events to make sure the plan is still appropriate and in line with current estate laws as these laws can change on an annual basis.
  • Planning for children. In addition to including children within an estate plan, it is also important to encourage children to set up an estate plan of their own once they turn 18. It is important for parents to discuss a variety of legal documents with their children, particularly a healthcare power of attorney. This document allows parents to make medical decisions for their child in the event that he or she is unable to make these decisions. This could be helpful in the event of a car crash or other accident. Without this document it can be very difficult for a parent to receive approval to make these decisions. Generally a hospital requires a court order to allow parents to act on their child's behalf when the child is over 18.

Importance of legal counsel

An estate plan is a unique and individual document. As such, each plan should be tailored to each individual's needs. Contact an experienced estate planning attorney to discuss your wishes and help better ensure an estate plan that meets your needs.

Keywords: estate plan