Creating an estate plan is one of the most important things you can do to protect you, your family, and your assets. Every estate plan is unique to the person(s) creating it, but there are many common mistakes that occur each time. Below, you’ll find some of the most important estate planning mistakes to avoid.
Not Even Having an Estate Plan
As obvious as it sounds, this is the most common mistake people make. As uncomfortable as it might be to think about your death, creating an estate plan helps your family handle your personal and financial affairs when the time comes.
Not Understanding the Estate Plan
Once you’ve created an estate plan, it is not enough to just have it. You’ll need to actually understand how it works. Don’t rely on your lawyer, spouse, or children to understand it for you. Make sure you know what your estate plan does and how you should manage it while you’re still alive.
Not Updating Your Estate Plan
The general recommendation is to update your estate plan every 3-5 years or at any major life event. As you age, your life circumstances are likely to change. You might get married or divorced. You might have children. Your children may turn 18. A family member may pass away. You may fall ill or get injured. You may have a significant career change, purchase a home, file for bankruptcy, etc. As your life circumstances change, so will your wishes and desire for what will happen to you and your estate.
Choosing the Wrong Executor
The executor is the person you elect to administer your estate after your death. You’ll want someone you can trust to follow out your wishes and obey the laws of your state. In general make sure the person is responsible, stable, trustworthy, and lives in the same state as you.
Outdated Beneficiary Designations
Many common estate planning mistakes are made when it comes to updating beneficiary information. Make sure to not only name beneficiaries to your assets, but keep them updated regularly. Just like updating the estate plan in general, life changes may mean beneficiary changes.
Not Hiring an Attorney
An estate planning lawyer has the education and experience to advise clients on preparing their affairs for incapacity and death. Since estate planning is not on the minds of most people day to day, it is best to hire a lawyer who specializes in estate planning.
Cheaper online methods of creating an estate plan do exist, but hiring a professional is the best way to ensure that: 1) your assets are truly protected, 2) your estate plan follows current law, and 3) that your wishes are carried out legally and correctly. The do-it-yourself forms rarely account for your specific needs. Many experienced estate planning attorneys also offer additional services like financial planning and probate and trust administration.