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Common estate planning errors

Individuals in New York who are estate planning should keep in mind that there are still a number of potential errors they must avoid. One of these is failing to update the estate plan regularly in response to a change in tax law or to life changes like births, deaths or changes in marital status.

It is also important to avoid assuming that making an estate plan simply consists of writing a will. An individual may wish to use a revocable trust to protect the privacy of the estate as well as avoiding the time and expense of probate. However, simply setting up the trust is not sufficient. It must be correctly funded as well. A pour over will can also add any additional assets to the trust.

For heirs who are young or have special needs, trusts may be necessary to distribute small amounts at a time from inheritances. Furthermore, depending on the needs of heirs, some may receive different distributions from others.

It is important for estate planners to keep in mind that assets such as life insurance policies and retirement accounts will go to beneficiaries instead of being covered by wills and trusts. Using professionals to put together an estate plan rather than relying on a DIY trust may help avoid pitfalls like this. A professional trustee may also be a better choice than a relative.

Individuals in the process of estate planning might work with an attorney to ensure that documents are prepared correctly. An attorney may also be able to steer an individual away from errors. An attorney might also suggest the best strategies for an individual based on their assets and family situation. For example, individuals with young children may wish to name guardians in their wills.

Source: CNBC, "Trust bust: Steer clear of the 8 biggest estate-planning mistakes", Barry Glassman, January 05, 2015

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