Making sure you have a truly effective estate plan in place requires a good bit of attention to detail. In a recent Investing Daily post, Bob Carlson points out some important planning issues that tend to be overlooked. For example:
- Lack of Liquidity. While an estate is being settled, it incurs operating expenses. If you don’t provide a plan for covering these expenses, your heirs could be shortchanged. Many estates are full of non-liquid assets, but they tend to run short on cash. If this is the case, your loved ones could be forced to sell off assets in a distress sale simply to raise cash to cover the necessary fees, taxes and other expenses of the estate. This, in turn, reduces the ultimate value of your estate, and cuts into the inheritances you planned to provide for your spouse, children, and other loved ones.
- No Inventory. You know what property you own, but does your executor or trustee? Leaving behind a list of your assets saves time, expense and unnecessary hassle in settling your estate.
- No List of Creditors. In addition to leaving a list of your assets, you should also leave a list of your debts, as well as contact information for your creditors. Not only does this help your executor or trustee to efficiently settle your final debts, it also reduces the likelihood that a false or inaccurate creditor claim will take a bite out of your estate.
- Wrong Represenatives for Your Estate. Choosing the right executor and/or trustee takes some serious thought, and not everyone realizes this when they’re making an estate plan. It’s easy to simply put your spouse or your oldest child in charge of settling your estate, but you want to choose a representative who can effectively handle the challenges that tend to come with the job.
If you’re not sure whether your estate plan covers all the necessary details, you should make an appointment with a qualified estate planning attorney. He or she can help you make sure you’ve covered all the bases.