Estate planning involves more than meeting with a lawyer to draw up some documents. There are notable challenges in the process, and it's important to understand the legal, personal, and financial implications. An estate planning attorney will warn you that addressing these three issues can be hard.

Settling Taxes and Debts

If an estate doesn't settle its tax and debt obligations, government agencies and creditors have the right to come after that money. Worse, if the estate isn't solvent enough, those parties can force it into bankruptcy. This may mean that beneficiaries will lose out because those obligations come first in the eyes of the law.

An estate planning lawyer will encourage you to fund tax bills and debts. Setting aside some money or assets can empower the executor to address these issues. For example, you might set up a vacation property as a store of value. When you pass, the estate plan can then authorize the executor to sell the property and use the proceeds to settle your outstanding obligations.

Bear in mind that properly funding these debts can be tough. You should review your estate plan annually to verify that your funding for obligations is keeping up with inflation and the ever-changing tax regime. Likewise, you should note new obligations and remove ones that are now settled.

Business

People who own stakes in businesses need to be aware of how those stakes affect their estate plans. If you serve an executive or ownership role based upon your stake, you need to outline successorship. Likewise, you may need to break up your interest in a business if you want to give something to several beneficiaries. You need to think about the potential impact on the business if this happens.

Medical and Special Needs of Loved Ones

One of the biggest estate planning fears is that a loved one won't have enough resources if the grantor passes. Your spouse might have medical needs that could present major financial challenges when you're gone. Even if you have enough money to fund their care, you need to be sure that the money will be immediately available. You may want to set up a trust to provide for your spouse's care.

This only gets more complex if the situation involves special needs. If you have an adult dependent child, for example, you'll have to be careful to protect their interests within your estate plan. Otherwise, they might be ripe for exploitation. For more information, contact an estate planning attorney near you.