Drawing up a thorough and well-considered estate plan is the only way to ensure that your family will be properly provided for after you pass away. However, even the best laid plans usually aren’t executed seamlessly. Unexpected occurrences are likely to affect your estate, so it is important to account for every possible scenario and mitigate risk to the best of your ability when you draw up your plan. The sooner you get started, the sooner you can rest assured that your family is protected.
Identifying Key Risk Factors
In order to mitigate risk, you first have to identify the possible threats that could derail your estate plan. Some of the most common of these threats include:
- Exposure to possible lawsuits. Different people may have various interests in your estate, and these interests may cause them to bring claims against you if they are not satisfied with the plan. It is important to be aware of all these possibilities so you can take steps to prevent them from affecting your beneficiaries.
- Unexpected tax levy. Your assets may be subject to a wide range of unexpected taxes. Being aware of these possibilities can decrease the burden on your beneficiaries.
- Death or disability of executor or beneficiaries. If someone named in your will as executor or beneficiary has died or become incapacitated before you pass away, the court will then have the power to carry out that part of your estate plan, which may result in an unwanted executor appointment or unintentional successor beneficiary. Keeping your plan up-to-date can help avoid this unwanted scenario.
- Potential for family argument. Not everyone will necessarily be satisfied with the role they play in your estate plan. Keeping your family apprised of their role can help avoid any nasty surprises.
Once you’ve identified the key risk factors, you can begin what is known as scenario planning. Scenario planning is a process of assessing medium- and long-term threats, and working to mitigate risk. In conjunction with an estate planning attorney, you will consider every possible risk factor and determine how vulnerable your assets are to each of these risks. The process of assessing these threats is done using what we call “key risk indicators.” Key risk indicators are a series of metrics that consider the potential consequences of every threat, and predict how these threats will play out.
Once you’ve assessed the level of threat, your estate planning attorney will help you determine the most effective strategies in order to mitigate risk. These strategies may include legal measures, such as asset protection planning, as well as more personalized tasks, such as speaking frankly with your family members to avoid any confusion. By taking a series of preventative measures, you can prioritize risk reduction in your estate plan and do your best to protect against unavoidable (and unforeseen) circumstances in the future.
Contact Caress Law, PC
At Caress Law, we have years of experience working with clients to plan their estates, mitigate risk, and ensure the future happiness of their loved ones. To learn more, give us a call today at (503) 292-8990 or fill out the form below.