7 Overlooked Risks in Trust and Estate Plans That Could Cost You Millions

Trust and estate plans are designed to protect your wealth and ensure it passes smoothly to your heirs. But even the most comprehensive plans can have hidden risks that, if overlooked, could cost you millions. Here are seven risks you should be aware of to ensure your estate plan remains secure.

1. Outdated Beneficiary Designations
   Even with a well-drafted estate plan, failing to update beneficiary designations on retirement accounts or insurance policies can lead to assets going to the wrong people. Regularly reviewing and updating these designations is key to avoiding costly mistakes.

2. Unanticipated Life Changes
   Divorce, remarriage, or the birth of a child can all have significant impacts on your estate plan. If your plan isn’t updated to reflect these life changes, your assets could be distributed in ways you didn’t intend. Keeping your plan current ensures it aligns with your present circumstances.

3. Failing to Plan for Incapacity
   While most estate plans focus on distributing assets after death, planning for incapacity is just as important. Without a power of attorney or healthcare directive, your family may struggle to manage your affairs if you become incapacitated. This could lead to unnecessary expenses and stress for your loved ones.

4. Ignoring State Tax Laws
   Many states have their own inheritance or estate taxes, and these can be triggered even if your estate is exempt from federal taxes. Neglecting to consider state tax laws in your plan could result in significant tax bills for your heirs.

5. Overlooked Trust Maintenance
   Trusts require ongoing maintenance to remain effective. Failing to transfer assets into the trust or neglecting to review its provisions regularly can undermine the entire plan. Regular check-ins with your estate planner can help keep your trust up to date.

6. Miscommunication Among Family Members
   A lack of communication about your estate plan can lead to disputes among your heirs. Clarifying your intentions with your family and ensuring everyone is aware of their roles can prevent future conflicts and legal challenges.

7. Changes in Tax Laws
   Tax laws change frequently, and what worked when you first set up your plan may not be effective now. Regularly reviewing your estate plan with a professional ensures it’s compliant with current laws and continues to provide the protections you intended.

At Proffitt & Goodson, we help high-net-worth individuals and families proactively address the risks that can undermine even the best estate plans. Our team will review your current plan and ensure that it’s up to date, protecting your wealth and your loved ones. Reach out to us today for a personalized consultation and safeguard your legacy.