4 mistakes that can happen if you don’t set up an estate plan

4 mistakes that can happen if you don’t set up an estate plan

On Behalf of | Sep 17, 2021 | Estate Planning |

Estate planning may not be a particularly fun process, but it is still very important. Putting the right documents in place now will protect you if you experience a medical emergency. It will also establish the legacy you want to leave behind, thereby protecting the people you love as well.

Procrastinating about estate planning is common, but it leaves you and everyone you love in a vulnerable position. Your estate could fall victim to the four mistakes listed below or a host of other issues if you don’t have an estate plan.

Your estate could shrink due to taxation

The state of Minnesota and the federal government assess estates taxes. If you don’t plan ahead to reduce the value of your estate or shield it from taxes, then you could lose 40% or even more of its total value to the government in taxes after you die. The greater the overall value of your estate, the higher the possible tax rate that will apply to your assets when you die. 

Your legacy could disappear due to creditor claims

Your credit card balances, medical debts and other debts don’t just disappear when you die. Your creditors have the right to bring claims against your estate. In fact, they can demand that your executor sell off every last asset to repay them before anything ever goes to your loved ones.

Not only could private creditors come after your property, but so could Medicaid. The Medicaid estate recovery program can make a claim against all of your major assets, including your house, unless you plan ahead to avoid those claims. 

The wrong people might inherit your property

If you die without an estate plan, then the Minnesota probate courts will imply intestate succession law to your property. That might mean that your closest family members are the ones who receive everything, even though you haven’t had a relationship with those people in years. Only by creating your own estate plan and will can you control who ultimately receives your assets when you die.

Your loved ones may not know about your health care preferences

Your estate plan isn’t just about distributing your property. It’s also about the care you might need after a medical emergency. All the people you love will likely try to act in your best interest, without advance directives regarding your health care preferences, they may not know what care you want to receive.

Thinking about your wishes now and creating an estate plan protects you and helps ensure that you leave a meaningful legacy after you die.