One size does not fit all when it comes to estate planning
Your estate plan doesn’t have to be complicated, but you’ll want to make sure you’ve covered all the angles – including family dynamics.
The plan for distributing your assets when you’re gone doesn’t have to be complicated, but it has more moving parts than you might think. From family dynamics and joint assets to coordination of beneficiary designations and assets in different jurisdictions — there are many important factors to consider.
Although a do-it-yourself attitude is admirable when building your own deck or arranging your own vacation, the mistakes you might make with a DIY estate plan are not easily fixed, especially since they might not be discovered until you are gone. For that reason alone, it’s worth getting help from a planning professional.
Cover all the angles
An estate plan can be surprisingly simple in design, but all good plans have one thing in common — they cover all the angles. The mistakes in estate planning often relate to what isn’t in the plan rather than what is.
One of the key benefits of planning with a professional is the use of a methodical approach to cover off the key elements that relate to your estate, whether related to business, your children from a previous marriage, beneficiaries, or assets in other jurisdictions.
For example, the coordination of beneficiary designations for insurance policies and registered plans is a commonly missed item. These policies and plans may have been put in place over many years, with designations that no longer reflect your desired division of assets.
Factor in family dynamics
It’s also important to start your planning at the right place, and family dynamics should be “square one” of the estate planning process.
The influence of family relationships on your plan is greater than any other factor. Who gets along with whom? Who has special needs? Should estate assets be owned jointly by all beneficiaries, or sold? Who do you trust to manage your estate?
If there are issues within your family now, you can be certain they won’t be any better once you’re gone. So arranging your estate in a manner that reflects the unique dynamics of your family – and communicating this plan during your lifetime to minimize estate conflicts later — are keys to effective planning.
Keep an eye on your expected future
As you look forward to a long, happy life, it’s important to plan with that good life in mind.
Look down the road several years and make an assessment of your expected assets. If, for example, you expect to sell your New York condo, it might not be worth putting complex tax planning in place for an asset that’s unlikely to form part of your estate, especially as tax and estate laws can change in the interim. The better short-term solution might be putting enough insurance in place to cover potential tax liabilities in the unlikely event you die before you have a chance to sell.
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