Too often, mistakes or gaps in a person’s estate plan are not discovered until after the person is gone and can no longer answer questions or provide direction. Under these circumstances, the loved ones affected by the estate plan ultimately pay the price.
With this in mind, we encourage readers to address the following common estate planning mistakes sooner, rather than later.
Not having an estate plan in place – Not having a will or other planning documents can be a critical misstep. It can mean lengthy probate proceedings, fights amongst your loved ones and expensive penalties to transfer or distribute assets. Creating an estate plan, even a basic one, can correct this mistake.
Having outdated documents – As this CNBC article notes, about one in six people have an outdated estate plan, and this can cause serious problems during probate. You should update your plan when you experience changes in your wishes, your finances or your relationships.
Keeping everything a secret – Estate planning is indeed a sensitive, personal process. And while you may be a private person, keeping everything a secret from everyone can create problems and confusion. You do not have to disclose all the details of your estate plan with everyone, but discussing your decisions with someone you trust can ensure at least one person knows your intentions and understands your plans.
Assuming you will always be able to manage your affairs – Too many people fail to make contingency plans for incapacity. They either don’t want to think about it or assume it could never happen. However, if you get sick or seriously injured and cannot express yourself or handle your finances, someone else will make decisions for you. Whether you or the courts choose that person depends on whether you take the time to assign powers of attorney or create a living will.
It may seem overwhelming or difficult to tackle these and other estate planning issues, but doing so now can give you — and your family — considerable peace of mind. These mistakes could have a profound impact on your legacy and your loved ones, and working with an attorney to avoid them can be wise.