Five Common Estate Planning Mistakes

by: Smith and Howard Wealth Management

At Smith and Howard Wealth Management we understand that estate planning can be an intimidating topic, even for the financially savvy individual.  Our team is committed to making the process accessible, ensuring a plan not only reflects our client’s goals but also that our client understands the plan and the reasoning behind it.

General advice can never substitute for individualized discussions with your advisor, but there are some mistakes we see often.  Among the most common estate planning mistakes are:

1. Failing to Plan – Far too many people put off estate planning either because they are intimidated by the process or they simply don’t want to contemplate the end.  Death comes whether or not we plan and failing to plan can cause unnecessary financial struggle.  Our professionals work with clients to ensure their estate plans reflect their wishes and mitigate the effect of tax laws.

2. Choosing the Wrong Trustees/Beneficiaries – Choosing capable and trustworthy fiduciaries is essential to ensuring your wishes are carried out.  There are many factors to consider such as whether an individual trustee has the time to devote to a large responsibility.  In some cases, particularly where emotionally-charged disputes are likely, a corporate trustee is the best option.  Even with a corporate trustee, avoiding conflicts of interest is essential.  We help our clients evaluate options.  Our planning process builds in flexibility to address a multitude of contingencies, such as what happens if named individual trustees pre-decease the client.

Likewise, we help our clients consider beneficiary issues, ensuring loved ones are cared for and not given fiscal responsibility they cannot handle.  Remember, “equal” isn’t always equitable.  Splitting assets equally among four children may not be ideal where one is wildly successful, one is in a (low-paying) philanthropic field, one is a minor, and the fourth is disabled.  Our overarching goal is ensuring your wishes are honored after your death.

3. Creating a Plan that is Too Complex/Specific – Sometimes clients come to us having “overplanned,” either on their own or with the help of an advisor.  We can help you develop a plan that is flexible, recognizing that simpler is usually better.  A life insurance trust is one great, easy tool.  We keep in mind tax law and consider options that limit government intrusion such as gifting to loved ones during life and leaving your estate to charity.  Our experienced wealth managers help clients make plans that adapt and avoid unnecessary complexity.  We find the easiest way to carry out your goals while ensuring the plan can adjust to a changing world.

4. Giving Away Too Much Too Soon – Americans are living longer and health care costs are rising rapidly.  Gifting can be part of a larger estate plan, but don’t neglect your own needs.  Our clients are thinking about their loved ones when they sit down to make an estate plan; we make sure they don’t forget themselves. Together we look at what you have (including whether assets are liquid), what you need now, and what you may need in the future to ensure your gifting plans don’t leave you in the difficult situation of being unable to cover your own expenses.

5. Failing to Review – We love our clients, but we don’t review plans annually just to spend time with them.  The world constantly changes.  Personal/Individual spheres also change.  Consider a child who had independent means but lost everything due to a market change or a beneficiary who, unexpectedly, becomes disabled and unable to work.  Similarly, a divorce or the arrival of a first grandchild may mean a plan no longer reflects your goals.  On a more general level, asset values rise and fall and the law evolves; a plan that is tax-savvy one year may not be so wise the next.  Estate planning is a process, not a one-and-done affair. We review plans annually to see if they still make sense, ensuring the plan still carries out our client’s wishes in the most effective manner possible.

Call your personal advisor or call SHWM at 404-874-6244 and establish a relationship with one of our experts to discuss translating this general advice into a specific plan that meets your individual goals.