Mistakes people often make in estate planning
There are a number of estate planning errors that people in Connecticut should avoid. One is failing to do any at all. A person who dies without a will or a trust is said to have died intestate, and state law dictates who inherits what assets.
This could have consequences besides just having assets go to unintended beneficiaries. For example, if one heir is a recipient of Social Security or other benefits, an inheritance could put a stop to them. Powers of attorney can be created that appoint people to make decisions about finances and health care in the event that the principal becomes incapacitated.
Although there are do-it-yourself services available for estate planning, using these instead of an attorney may be a mistake. It can be easy to make an error that invalidates the will. People may also make errors on beneficiary designations and joint accounts. For example, beneficiary designations, which are used for assets such as IRAs and 401(k)s, override wills and trusts and so should be consistent with those documents. Estate plans also need to be reviewed regularly, and it is important to make sure children from previous relationships and current spouses are included. Finally, people should be forthcoming with the professional assisting with the estate plan about assets and potential family conflicts.
A professional may also be able to explain how certain tools could be useful for a person's situation. For example, in the situation described above, in which a person receiving benefits has them cut off upon receiving an inheritance, a special needs trust could help prevent this problem. With this type of trust, money could be paid out directly to a provider, such as for the beneficiary's rent or other necessities.