You should treat your estate plan as a living document that adapts as your circumstances change. Unfortunately, many people overlook critical areas of their estate plan when updating their documents, leaving gaps that make space for disputes and confusion down the line. At Johannesmeyer & Sawyer, PLLC, we see estate planning mistakes in Baltimore, MD, rather frequently.
Knowing which mistakes to avoid when updating your plan ensures you're always anticipating and addressing any future challenges. Next time you meet with your estate planning attorney to update your wills and trusts, be sure to avoid these five key errors:
1. Not Thinking About Recent Major Life Events
Failing to account for recent life changes can render your estate plan outdated and less effective. Major events, such as marriage, divorce, a new child, a significant change in assets, or the death of a beneficiary, often require revisions to your wills, trusts, and beneficiary designations. If these updates are delayed, your documents may no longer reflect your intentions, increasing the likelihood of disputes or unintended distributions.
Reviewing your plan after each major milestone helps ensure that your wishes remain clear, legally sound, and aligned with your current family structure and financial situation.
2. Forgetting the Estate Tax
One of the common estate planning mistakes in Baltimore, MD, is failing to consider the estate tax. Overlooking potential tax obligations can reduce the amount your beneficiaries ultimately gain access to. Federal and Maryland estate tax rules may apply, depending on your assets and how they're structured.
Reviewing current tax thresholds and discussing available asset protection tools with your attorney helps you understand your exposure and make informed decisions.
3. Skipping Incapacitation Plans
Failing to plan for possible incapacity can leave your family unsure of your wishes and unable to act on your behalf. Your updated estate plan should include documents such as a durable financial power of attorney, a health care directive, and a HIPAA release. These tools allow trusted individuals to manage your finances, make medical decisions on your behalf, and access necessary information if you become unable to do so.
Reviewing and updating your incapacitation plans routinely ensures that your preferences are always clear in case they're ever needed.
4. Failing To Update Beneficiaries
You can always benefit from reviewing your beneficiary designations to ensure that they still align with your current intentions. Accounts such as life insurance policies, retirement plans, and payable-on-death accounts pass directly to the named beneficiaries, regardless of what your will or trust says. If those designations are outdated, such as listing an ex-spouse or someone who has passed away, your assets may not go where you expect.
Regularly confirming and updating these designations ensures that they match your broader estate plan and reflect any recent changes in your family or finances. This simple step helps keep your overall plan consistent and reduces the likelihood of disputes during the probate process.
5. Forgetting Your Digital Assets
In our modern world, digital assets are taking over, creating more estate planning mistakes in Baltimore, MD. Online accounts, cloud storage, digital photos, social media profiles, and cryptocurrency require clear instructions for access and management. Without guidance, these assets may be difficult or impossible for others to locate.
When updating your plan, include a digital inventory with access details and authorization language to ensure these items are properly handled and preserved according to your wishes.
Don't Make These Estate Planning Mistakes in Baltimore; Work With an Attorney Today
Avoid common estate planning mistakes in Baltimore, MD, by working with our experienced team at Johannesmeyer & Sawyer, PLLC. Contact us via phone at (240) 249-7890 or via form to schedule a consultation
FREQUENTLY ASKED QUESTIONS (FAQ):
Why is it important to update my estate plan after a major life event?
Major life events like marriage, divorce, a new child, or a death in the family necessitate revisions to ensure your wills, trusts, and beneficiary designations reflect your current intentions and remain legally sound.
What are some examples of incapacitation plans I should include?
Essential incapacitation plans include a durable financial power of attorney, a health care directive, and a HIPAA release, which allow trusted individuals to act on your behalf if you become unable to do so.
Do I need to include my digital assets in my estate plan?
Yes, in the modern world, digital assets like online accounts, cloud storage, social media profiles, and cryptocurrency require clear instructions for access and management to ensure they are handled and preserved according to your wishes.
