The process of estate planning can ensure your final wishes are enacted while avoiding unnecessary tax complications along the way. However, this process can be complicated, and one mistake could not only undo the benefits of an estate plan but also create additional issues that were not present before.
Anything from technical errors in your trust documents to the failure to maintain updated beneficiary information can be problematic. Thankfully, you do not have to face these issues with estate planning in Prescott on your own. A diligent estate planning attorney could help you avoid each of these problems while working toward an effective estate plan on your behalf.
One of the primary goals of the estate planning process is ensuring a person’s assets are distributed to the beneficiaries of their choice. That said, major life changes can radically impact a person’s preferred beneficiaries. Divorces and family strife can rapidly change relationships, and these changing relationships can alter a person’s last wishes.
For this reason, it is important to regularly review beneficiary information. The failure to do so after a major life event could result in issues providing for a new child or result in the transfer of a person’s assets to their former spouse.
In some cases, a beneficiary will die before the creator of the estate. If the estate plan does not take into account the death of a beneficiary, it could undo the remainder of a carefully planned estate. A local attorney could help someone planning their estate understand how to avoid these issues.
If an estate plan is properly executed, it will account for every asset that was owned by the deceased person. By carefully addressing all of the decedent’s assets, it could be possible to avoid costly litigation or the process of probate.
One error that can frustrate these goals is the failure to include a residuary clause in a will or trust. A residuary clause determines what happens to assets not assigned to a beneficiary directly. The failure to designate a beneficiary for any residual property in an estate plan can require additional legal work or probate that could have been avoided had this mistake been avoided.
It is not uncommon for individuals planning an estate to leave assets to minor children or family members. However, an estate plan in Prescott that does not carefully address how these assets are to be used for a child’s benefit could frustrate the decedent’s intent. An estate plan should establish a guardianship for minor beneficiaries and spell out how the funds should be put to use.
The tax issues that surround estate planning in Prescott, and throughout Arizona, are complex, as altering the amount given to a specific beneficiary by a few dollars could have enormous tax consequences. The same is true for individuals that attempt to avoid tax liability by selling assets far below market value. Any attempt to sell property below market value can be treated as a gift, which could lead to substantial tax consequences for the beneficiary.
If you are considering an estate plan, taking on this challenge alone is often a mistake. There are countless moving parts in the estate planning process, from identifying beneficiaries to addressing tax questions. An error during any of the steps can have severe consequences.
Let a seasoned lawyer help you avoid issues with estate planning in Prescott. Call our office to learn more.
Willison Law, PC
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