Estate planning is a critical life task that everyone should complete. Unfortunately, many folks do it without any professional guidance, leading them to commit avoidable mistakes that result in bad outcomes. Here are 8 things to watch for when estate planning and how to deal with them.
1- Keeping Friends and Family in the Dark
While you may avoid talking to your friends and family about your private affairs, not discussing your estate planning will breed disagreements and disputes that may end with your wishes not being honored when you pass. At a minimum, go over your plan with your spouse and appointed executor to ensure they have the info needed to implement your plan.
2- Taking a One-and-Done Approach
Getting your affairs in order requires a lot of mental and emotional labor. But you’re setting your beneficiaries up to fail if you throw the document in a drawer and never think about it again after creating it. Regularly review your estate plan—especially after major life events such as having kids—to ensure it still aligns with your current circumstances and goals.
3- Not Understanding Inheritance Law
You don’t need a law degree to create an estate plan, but not knowing or understanding the relevant statutes can throw a wrench in your best-laid plans. For instance, your ex-spouse may be entitled to money and assets even though you’re divorced. Minimize unwanted outcomes by having an attorney review your estate plan to make sure it accounts for the inheritance laws that apply to your situation.
4- Failing to Plan for Healthcare Needs
It’s nice to think you’ll stay healthy your whole life but, more likely than not, you’ll probably need assistive care in the future due to disability, illness, or just plain aging. Your estate plan should include instructions and funding for this eventuality. This includes purchasing disability and long-term care insurance as well as developing a living will detailing how to handle your medical needs if you become incapacitated.
5- Assuming You Own Assets
Many times, people assumed they owned something only to discover it legally belonged to someone else or was never purchased in the first place. Take time to verify you have legal and full ownership of your assets, and fix any issues before including them in your estate plan.
6- Not Accounting for the Tax Man
People often forget to include taxes in their planning. For instance, heirs must pay an inheritance tax if they receive cash, reducing the amount they’ll receive. Consult with an accountant about the relevant tax laws that will affect your estate plan and craft your disbursement accordingly.
7- Carelessly Choosing Executors and Administrators
Estate executors are responsible for implementing your estate plan, and how well things go will depend a lot on the type of person you put in charge. Choose executors who are trustworthy, responsible, and can keep a level head when things get heated. Additionally, list a backup in case the main person can’t do the job.
8- Forgetting Your Digital Life
Leave instructions about what you want done with your online accounts, such as your social media profiles and email. Be sure to include the relevant site names and passwords, so the executor can gain access without getting attorneys involved.
Take time to work on your estate plan so you and your family can have peace of mind. For help with this project, contact a local lawyer.