Estate planning is essential for protecting your loved ones after you’re gone, but many families in Nevada make mistakes that can cause unnecessary delays and legal headaches. Without proper planning, your family could face complications that could have been avoided with the proper steps.
Some of the most common estate planning mistakes Nevada families make include failing to update a will, not naming beneficiaries, and not having a clear plan for asset distribution. These mistakes can lead to extra costs, delays, and even disputes between family members.
Want to avoid costly mistakes? Keep reading to learn how to create a solid estate plan and ensure your family is cared for according to your wishes.
1. Not Having an Estate Plan at All
One of families’ most significant mistakes was not having an estate plan. Without a plan, Nevada’s laws decide how your assets are distributed, and this process can be long, expensive, and stressful for your family. If you die without a will or trust, your estate goes through probate, a court process that can take months or even years.
For example, a Fresno family might find that after their loved one passes away without a plan, the assets are divided by the courts instead of according to the deceased’s wishes. This can cause family members to fight over who gets what, leading to frustration and strained relationships. To avoid this, having a will or trust that clearly outlines your wishes is essential.
2. Not Updating the Estate Plan Regularly
Another common estate planning mistake in Nevada is failing to update your estate plan after life events like marriage, divorce, having children, or changing your financial situation. If you don’t update your estate plan, your wishes may not reflect your current life circumstances.
For example, imagine you have a trust that names your spouse as the beneficiary. But then you get divorced, and your spouse is still listed as the beneficiary in your estate plan. If you don’t update the documents, your spouse might still inherit everything when you pass away, even if you no longer want that.
Reviewing and updating your estate plan every few years or after significant life changes is essential. This helps ensure your estate is distributed the way you want it and avoids potential confusion or conflict in the future.
3. Failing to Appoint an Executor
Not naming an executor for your estate is another serious mistake. An executor is the person responsible for making sure your estate is distributed according to your wishes. If you don’t appoint one, the court will choose someone for you who might not be the person you would have selected.
If you’re in Nevada and don’t name an executor, the court might appoint a distant relative or someone who doesn’t understand your wishes. This can cause delays and added stress for your loved ones. Choose someone who is trustworthy, organized, and able to handle the responsibilities of managing your estate.
4. Not Naming Beneficiaries for Assets
Another mistake families often make in Nevada estate planning is failing to name beneficiaries for key assets, like life insurance policies, retirement accounts, and bank accounts. If you don’t name beneficiaries, these assets could become part of your estate and go through probate, delaying the transfer to your loved ones.
Let’s say you have a life insurance policy with no designated beneficiary. When you pass away, the money will go to your estate and will be tied up in probate. This means your loved ones won’t receive the funds quickly, and the process can be complicated. By naming beneficiaries, you ensure that these assets go directly to the people you want to receive them.
It’s important to regularly review your beneficiary designations, especially after major life changes like marriage, divorce, or the birth of children. If you forget to update your beneficiaries, your assets might end up in the wrong hands, which can create confusion and conflict among family members.
5. Overlooking Federal Estate Taxes
While Nevada doesn’t have a state estate tax, families may still face federal estate taxes if their estate is worth more than $12 million. This is an important issue, especially if you have substantial assets like real estate or investments. If your estate exceeds the federal threshold, your beneficiaries may be required to pay taxes over $12 million.
For instance, you own multiple properties in Nevada and other states, and your total estate is valued at $15 million. This means the $3 million above the $12 million exemption could be subject to federal estate taxes. Without planning for this, your beneficiaries might face a heavy tax burden, potentially forcing them to sell assets to cover the taxes.
To avoid this, it’s important to consult with an estate planning attorney who can help you structure your estate to minimize taxes. Options like gifting during your lifetime or creating a trust can help reduce the taxable value of your estate and save your loved ones from unnecessary tax expenses.
6. Don’t Consider Long-Term Care or Disability Planning?
Many families forget to plan for long-term care or disability. If you become incapacitated and can no longer manage your affairs, a power of attorney is necessary to ensure someone you trust can handle your financial and medical decisions. Without this planning, your family might face challenges in making these decisions on your behalf.
If you suddenly fall ill and can’t make decisions for yourself, your loved ones might have to go through a lengthy court process to gain the right to make decisions for you. This can be stressful and time-consuming. A durable power of attorney ensures your financial and medical wishes are followed, no matter what happens to your health.
7. Mistakes to Avoid When Choosing the Right Estate Planning Tools
Choosing the right estate planning tools is just as important as avoiding common mistakes in Nevada estate planning. Families often make the mistake of not considering all the available tools or using the wrong ones for their needs. In this section, we’ll explore common mistakes families make when choosing estate planning tools and how to avoid them.
1. Relying Solely on a Will
While a will is essential to an estate plan, relying solely on a will can create complications. A will goes through probate, which means the court must approve it before assets can be distributed. Probate can be time-consuming and expensive and can lead to public disclosure of your estate, which you may want to avoid.
Instead, many families in Nevada choose to use a revocable living trust, which allows assets to be transferred to beneficiaries without going through probate. With a living trust, you can manage your assets during your lifetime, and your beneficiaries can receive those assets directly after your passing without the lengthy probate process.
It’s important to consider both a will and a trust as complementary tools for a well-rounded estate plan. While a will can cover personal belongings and guardianship of children, a trust can help avoid probate and manage larger assets like real estate and financial accounts.
2. Not Considering Special Needs Planning
If you have a child or family member with special needs, planning for their future care is essential. Many families make the mistake of not considering special needs planning, which can leave their loved ones without the resources they need after their passing.
A special needs trust is a key tool for Nevada families who want to ensure a loved one with disabilities is properly cared for without losing access to government benefits. This type of trust allows individuals to receive inheritance or other assets without affecting their eligibility for government assistance programs like Medicaid or Supplemental Security Income (SSI).
3. Don’t Review Your Estate Plan Regularly
Finally, one of the most common mistakes is failing to review and update your estate plan regularly. Changes in life circumstances, such as marriage, divorce, the birth of a child, or financial situation, should prompt you to revisit your estate plan.
For instance, if you have a child, you’ll want to update your will to name a guardian for them. If your financial situation improves, you might need to adjust your trust to include additional assets or to reduce estate taxes. Regular reviews ensure your estate plan reflects your current wishes and prevents future complications.
Conclusion
Estate planning is essential for families in Nevada to protect their assets and ensure their loved ones are taken care of. You can create a strong, practical plan that protects your family’s future by avoiding common estate planning mistakes in Nevada, such as not having a plan, failing to update it, and choosing the wrong estate planning tools.
Don’t leave your family’s future to chance. If you’re ready to create or update your estate plan, contact Sean Tanko Law today for a free consultation. We can help you avoid common estate planning mistakes in Nevada and ensure your wishes are carried out properly. Let’s get started on securing your future!
