While estate planning is a complex process for anyone, it can become even more complicated if you have a large number of assets to manage within your estate plan. Unfortunately, many high net worth individuals fail to anticipate the complications that such large estates can cause, resulting in legal and financial problems for themselves and their heirs. Here are five common mistakes high net worth individuals make when planning their estates:
- Not keeping track of your assets
- One of the disadvantages to having a high net worth is that you may find yourself with more assets than you can reasonably keep track of yourself. Even if you can that does not mean your executor will be able to track everything down once you pass away. That is why you must keep accurate, up-to-date records for your entire estate. Otherwise, it could complicate the process of distributing your estate, or even result in valuable assets being lost in the mire of bureaucracy.
- Failing to appoint an executor
- Many people think of the role of an executor as essentially a formality and consequently fail to put a great deal of thought into who they appoint to be their executor. This is a serious mistake as the executor is responsible for both distributing the estate and representing the estate in court. For high net worth individuals, picking the wrong executor, or failing to select an executor at all, can mean putting their estate in the hands of someone who will enrich themselves at the expense of all of the estate’s heirs.
- Not having advance directives in place
- Estate planning is not just about what happens after you pass away, though. Advance directives like a power of attorney, health care proxy, or living will can help protect you and your interests while you are still alive, if you become unable to take care of yourself. Unfortunately, many people do not consider what might happen if they are incapacitated or put off this aspect of estate planning until it is too late, creating far bigger problems for themselves and their loved ones.
- Failing to plan for estate and gift taxes
- High net worth individuals often deal with high tax rates in life and unfortunately, that does not change once they pass away. Estate taxes and gift taxes can diminish a massive amount of your estate. Therefore, planning is essential to reduce your tax liability. If you fail to plan properly you may lose much of your estate to payment of taxes rather than going to your heirs as you intended.
- Getting mired in the probate process
- Probate is the process by which an estate is verified and the assets are distributed to one’s heirs. What many people do not know is that there are ways to avoid probate to allow estate distribution to begin much faster and easier. However, doing this requires a proper estate plan which should only be done with the guidance of a lawyer knowledgeable in estate law.
Whether for yourself or for a loved one, estate and elder law planning can be overwhelming and emotionally taxing. The legal professionals at Hobson-Williams, P.C. will advise you on the options available to you, and help you establish a plan that best suits your needs. Call (718) 210-4744 or visit our contact page to speak to one of our attorneys and learn how Hobson-Williams, P.C. can help you gain the peace of mind that comes from being prepared for the future.