If you have some kind of estate plan, you’re already ahead of a lot of people. But if you haven’t reviewed it periodically, your plan could be less than adequate when it comes time to execute. This can cause headaches and heartbreak for loved ones, difficult conversations and circumstances, and could even mean what you intended in creating your plan doesn’t ever materialize.
Here’s some common mistakes to avoid:
You set up an estate plan….decades ago. Congratulations! You did the right thing setting up an estate plan, health and legal directives, a will, possibly a trust. But…dun, dun, dun! You haven’t reviewed it in over ten years. You’ve sold your business, retired, bought a second home, had grandchildren. A lot has changed, but your estate plan doesn’t reflect your evolving priorities or situation.
You’re waiting too long. It’s hard thinking about your own death, especially in such a business-like manner. However, we’re not invincible, and failing to address your mortality and the legacy you want to leave behind can have painful and financial consequences to your loved ones. Waiting until later in life could present obstacles like diminished faculties or declining health, or could even rob you of the opportunity to plan all together.
You don’t discuss your plan with loved ones. Failing to discuss details of an estate or legacy plan with your spouse, executors, heirs, applicable business partners, and beneficiaries can lead to assumptions and differences in expectations or opinions. Nobody creates an estate plan so their children can fight for years over the execution. Save your loved ones the difficult conversations upon your passing – talk about your intentions with them now.
You made the wrong person executor. Executors are there to fulfill your wishes upon your death. Don’t choose someone who lacks the interest or temperament to carry out your estate plan. Sometimes it’s beneficial to have a third party or attorney act as executor to eliminate the emotional complications of decision making. Also keep the future health and intellectual capacities in mind when selecting an executor.
You haven’t updated your beneficiaries. Beneficiary designations on retirement savings accounts and life insurance policies can legally override will bequests. This is one of the most commonly overlooked estate planning mistakes. Outdated designations can result in ex-spouses or estranged relatives receiving proceeds or assets.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.