The word "estate" can be a tricky one for people to get their head around -- perhaps especially in Minnesota. The vast majority of hard working individuals probably don't think of their single family home or apartment, or other personal treasure, as an estate. But by strict definition an estate is more broadly framed. It means the net worth of a person at any given point in time. And it doesn't matter if you are alive or dead.
Experienced estate planning attorneys know that the broader definition is the one that applies in law. They also know how the law can be used to protect the value of an estate, no matter what assets are used to create that estate. That being the case, perhaps the biggest mistake any individual can make is failing to have an estate plan in place.
No matter what stage in life you happen to be in, if you have something that you value, that is your estate. And developing a plan for it really just reflects one's common sense.
In addition to having no estate plan at all there are some other errors worth avoiding. These include:
- Not anticipating "what if." The federal government estimates that 25 percent of those who are now 20 years old will become disabled before retiring. If incapacity strikes, can your estate be put to work for you? How should that happen?
- Failing to update your plan. The plan can be made up of a lot of elements. There may be trusts. Your will is the key document that explains how you want your assets managed after you die. But conditions under which the will was first created usually change over time. Each major life event warrants a revisit of the will to be sure it's current with your needs.
- Not reducing potential tax obligations through gifting. The Internal Revenue Code makes it possible to gift money to others in a way that excludes the funds from the estate tax. There may be provisions for reducing the tax obligation to the state, as well.
It doesn't matter if you are a member of the Cargill/MacMillan family or new immigrants to the state, cherished assets deserve an estate plan that stands up to the law.