According to estate planning professionals, almost 65% of Americans do not have a basic will or estate documents drafted. Although it is nice to think that your family will be able to take care of your estate and know your wishes, the truth is that if you do not have your estate plan in place there could be fighting about what your final wishes truly were. Leaving a comprehensive estate plan with clear instructions to your heirs is the best defense against family discord after you are gone. Here are some of the most common estate planning blunders and how to avoid them in your planning process.
Mistake #1: Assuming Estate Plans are Only for the Wealthy
One of the most common misconceptions about estate planning is that it is only for the wealthy. The truth is that anyone who wants a say in their end-of-life medical decisions, assets, heirs’ well-being, or general private affairs should have some kind of estate plan in place. If you want control over your life and drastically reduce the burden on your family after you are gone you need to draft an estate plan.
Mistake #2: Thinking that Your Finances are Too Simple for an Estate Plan
Many people think that their finances are so straightforward that they do not need to create an estate plan or that simply creating a joint tenancy in assets is enough to protect them. The reality is that no one’s financial life is as simple as it appears. If you have young children, you need to consider appointing a conservator, and only establishing joint tenancies for assets can exclude other heirs from parts of the estate.
Mistake #3: Procrastinating in Your Estate Plan
The number one excuse of Americans who do not have an estate plan in place is that “they just haven’t gotten around to it yet.” For your own peace of mind, and to avoid any potential “what if” scenarios, you should consider starting the process as soon as possible. In addition to apportioning your estate to your heirs, it can help if you are no longer able to make decisions on your own and your family needs to know what you want if you become disabled.
Mistake #4: Forgetting about Your Digital Assets
Property is no longer what you physically own but what you digitally own, as well. Do not forget to include instructions in your estate plan about what to do with your digital assets. Create a list of online subscriptions, user names, and passwords so that your family can access your digital assets. You should also consider what you want to do with your social media pages and decide if you want your family to take those pages down or leave them up in memoriam.
Mistake #5: Not Preparing for “What If” Scenarios
While it is nice to think that your life will work out exactly like you planned, not every story has a happy ending. Marriages end in divorce, loved ones suffer addictions or pass away, business fail, and children can become estranged. Your estate plan can cover all contingencies, both good and bad.
Mistake #6: Forgetting about Your Pets
If you do not want your pet dumped at a shelter or euthanized after you can no longer care for it, you should include instructions for your pet’s care in your estate plan. Legally, your pets are considered personal property, and you can dictate who gets your pet when you are gone. Creating a pet trust that sets money aside for your pet’s care is also another option for your estate plan.
Mistake #7: Not Thinking Through Who to Name as Trustee
Deciding who will be in charge of your affairs and your assets once you have passed away should not be done arbitrarily. Name a person who is up for the job and knows exactly what responsibilities are involved. Also consider naming a backup trustee or executor in case the original person cannot fulfill the duties.