Estate planning is easy to put off. It can be frightening to talk about plans surrounding death, old age, and potential disability. But sadly, this unwillingness to face reality sooner rather than later can often create serious hardship for you and your loved ones.
Without a thorough understanding of how the legal process works upon your death or incapacity, you’ll likely make serious mistakes when creating a will or trust. And the worst part is that these mistakes typically aren’t discovered until you are gone.
Last week in part one, we highlighted the first five of ten of the most common estate-planning mistakes, and here we wrap up the list with the remaining five mistakes.
6. Not Updating Beneficiary Designations
In addition to reviewing and updating your core estate planning documents like your will, trust, and power of attorney, it’s crucial that you also update the documentation for your other assets, especially those with beneficiary designations.
Some people assume that because they’ve named a specific heir as the beneficiary of their IRA in their will or trust that there’s no need to list the same person again as a beneficiary in their IRA paperwork. Because of this, they leave the IRA beneficiary form blank or list “my estate” as the beneficiary. This is a mistake, as It makes no difference who is listed as the beneficiary in your will or trust; you must list the person you want to inherit the asset in the beneficiary designation, or your heirs will have to go to court to claim the asset.
And you should never name a minor child as a beneficiary of your life insurance or retirement accounts, even as the secondary beneficiary. If a child inherits assets, the assets become subject to control of the court until they reach the age of 18, and then, the assets are distributed outright without any protection or direction.
7. Improper Execution
You could have the best estate planning documents in the world, but if you fail to sign them, or sign them improperly, they will fail. This might seem trivial, but we see it all the time. A loved one dies, their family brings their estate planning documents to us, and we can’t help them because the documents were either not signed or were signed improperly. This is especially something to watch out for if you’re attempting to DIY these documents yourself.
8. Choosing The Wrong Executors Or Trustees
In addition to laws regarding execution, state laws are also very specific about who can serve in certain roles like executor, trustee, or financial power of attorney. In some states, for instance, the executor of your will must either be a family member or an in-law.
At Truest Law, we will guide you to choose the most appropriate and qualified executors and/or trustees to manage your estate and assets.
9. Unintended Conflict Between Family Members
Family dynamics are often complex. This is particularly true for blended families, where spouses have children from previous relationships. If you try to go it alone using a DIY document service, you won’t be able to consider all of the potential areas where conflict might arise among your family members and plan ahead to avoid such disputes.
10. Failing To Properly Name Guardians For Minor Children
If you are a mom or dad with children under the age of 18 at home, your number-one estate planning priority should be selecting and legally documenting both long and short-term guardians for your kids.
Since we know that your will only becomes operative in the event of your death, it’s important that your guardians are in place for your children in the event that anything ever happens to you. If you don’t feel confident with the plan you have in place, call us today for a Kids Protection Plan®, which is included with every estate plan we prepare for families with young children.
The Kids Protection Plan® was created by a nationally recognized attorney, who is a mom herself, to make 100% certain that her kids would always remain in the loving care of people she knows and trusts and never be raised by anyone she didn’t want. And now, you can put this same plan in place for your kids.
Life & Legacy Planning
The DIY approach might be a good idea if you’re looking to build a new deck for your backyard, but when it comes to estate planning, it’s actually one of the worst choices you can make. Are you really willing to put your family’s well-being and wealth at risk just to save a few bucks?
If you’ve yet to do any planning, contact us at Truest Law to schedule a Family Wealth Planning Session, which is the first step in our Life & Legacy Planning Process. During this initial meeting, we’ll take you through an analysis of your assets, what’s most important to you, and what will happen to your loved ones when you die or if you become incapacitated.
And if you’ve already created an estate plan—whether it’s a DIY job or one created with another lawyer’s help—contact us to schedule an Estate Plan Review & Check-Up. With our support, we will ensure your plan is not only properly drafted and updated, but that it has all of the protections in place