There are a million stories out there about how someone’s initial failure inspired their greatest success. At first someone messed up horribly, but then they turned their life around, or started thinking about a problem from a different perspective, and things turned out great. These stories may be heartwarming, but the idea that every mistake leads to something better on down the line is misleading… especially when it comes to estate planning.
Screwing up your estate plan can have a devastating impact on your loved ones after you are gone, and may make already difficult situations worse if you ever become incapacitated. Below are 10 huge mistakes everyone who is making an estate plan should avoid.
1. Counting on people who are unwilling or unable to help you.
One of the key parts of estate planning is nominating people who will take the ideas written into your estate plan and do their best to make them a reality. This may include:
- Someone with power of attorney for healthcare who will follow the directions laid out in your living will in case you become too ill to make decisions for yourself
- Someone who can make financial decisions on your behalf if you become incapacitated
- Guardians for your minor children
- Trustees for any trusts you create
- An estate administrator
You might want one person to fill several of these roles, or you might give them to different people. The choice is up to you. But you need to make sure the people you want to fill these roles are willing and able to do so. They need to know that you are counting on them, and agree to step up if needed.
Too many people are shocked to discover that they are named in a loved one’s estate plan not as the recipient of a large chunk of change or other valuable asset, but as someone to be put to work! Having a conversation with your loved ones about your end of life expectations and what role you hope they will serve is critical.
2. Dropping in a surprise.
Speaking of surprises, your estate plan is not the place to reveal you have a love child or cut a family member off for slighting you. Sharing deep and dark secrets from beyond the grave may make for a compelling movie plot, but in real life it is more like a horror story.
Your loved ones shouldn’t have to spend a bunch of their time, and a sizable chunk of your estate, defending your choices just because you have a flair for the dramatic. Be open with your loved ones about what your estate plan includes, and address anything you are tempted to make a surprise head on.
3. Waiting until you are dead to start giving assets to others.
Delaying the transfer of your assets to your loved ones until after your death could end up costing you a lot of money.
Planning ahead and making transfers now can reduce your tax burden or help you become financially eligible for government assistance to pay for long-term care. The more time you leave for these important tasks, the better.
Delaying the transfer of physical items that have monetary or sentimental value can also prove a costly mistake. Legal fights can pop up if specific items cannot be found after you are gone, or one of your loved ones believes a mistake has been made and challenges a bequest. It is much easier to pass items on while you are available to explain their importance and why you are giving them to one person and not another. As an added bonus, many clients tell us they really bonded with their loved ones over the items they passed on.
4. Including your funeral and burial plans.
Most estate planning documents are not consulted until after the funeral and burial of the deceased person have taken place. It is very stressful for loved ones to find out the funeral and burial they arranged were not at all what their loved one wanted.
Avoid this mistake by discussing your wishes with your loved ones ahead of time.
5. Forgetting that other things may override your will.
Putting something in your will does not guarantee it will happen. Requests that are impossible, or go against public policy, will be ignored.
If you have titled assets so that they automatically transfer to someone else at the time of your death, or filled out “payable on death” forms at the request of your financial institutions, those items will not be included in your estate plan. It is impossible for your estate plan to control assets that are never in your estate because they were automatically transferred to someone else.
Courts will also void provisions in your estate plan that go against public policy. For example, you can’t make a financial gift to your daughter conditional on her divorcing her husband.
To ensure your plans are followed, you need to be open with your attorney about your wishes and periodically check that your plan will work the way you intend.
6. Ignoring the rising cost of long-term care.
It is more expensive than ever to hire home health aides, or pay for a stay in an assisted living facility or nursing home. Most people need to think about how they will pay for this sort of long-term care, and use their estate plan to ensure they will be well cared for.
7. Waiting until old age to do any estate planning.
Estate planning is not something you can or should put off until old age. You never know when you may be involved in an accident or become so ill you cannot make medical and financial decisions for yourself.
8. Not updating your documents.
Your family, your preferences, and the law all change over time. It is important to periodically update your will to make sure it still works as you intend.
9. Working with an attorney who is not an estate planning specialist.
Just like doctors specialize in different areas, so too do attorneys. The attorney who helped you buy a house or settled your claims after an auto accident is probably great at what they do, but they might not know anything about estate planning. Relying on the advice of someone who is trying to figure out how to do what you want on the fly will not serve you well.
10. Not making any plans.
The biggest estate planning mistake people make is not making any sort of plan at all. No matter the size of your estate, there is too much at stake to leave your end of life wishes in the hands of the state of Mississippi.
Preserving Your Wealth. Protecting Your Loved Ones.
When you are ready to draft or update your estate plan, the Palmer & Slay team is here to help you make sure no mistakes are made. Our experienced team of estate planning professionals can craft a will and other documents that meet your specific needs. Please contact us today to schedule a meeting.