Estate Planning Mistakes to Avoid

By on September 18, 2013
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Estate planning is far more complicated than most people realize. For many, a well-crafted estate plan involves far more than just a will. Depending on your family situation, your assets and other factors, your estate plan may involve numerous moving parts. With such complex machinery, it’s easy to make a mistake. Review this list of common estate planning errors to make sure your estate plan is in good working order and your retirement is taken care of.

Eight Estate Planning Mistakes

  1. Putting it off. You never know what the future holds. If you put off setting up your estate plan, it may eventually be too late. And dying without a will and other estate planning documents can lead to frustration and heartache for your survivors.
  2. Not getting help. Your situation is probably more complicated than you realize. Many people can benefit from hiring an experienced estate planning attorney, who had the knowledge and the background to make sure that your estate plan is appropriate for your needs.
  3. Not taking a “big picture” approach. Don’t just think about the most obvious situations and possibilities. Sometimes, it pays to consider all the “what-if” scenarios so you can be sure you’re protected from all angles. For example, married couples may fail to consider what impact a divorce will have on their estate plan, even though a significant number of marriages don’t last. An estate planning attorney can structure trusts in such a way that assets are protected even in the event a couple breaks up.
  4. 4.       Not reading the fine print. Make sure you really understand all the details in your estate planning documents, so that you can be sure that your wishes will be followed after you are gone. If you have trouble understanding something, talk to your estate planning attorney, who should be able to provide a plain-English explanation.
  5. Not planning for what will happen to your pets. Many people consider their pets part of their family. But you’d be surprised at how many people neglect to say who should care for their pets after they are gone, or make any provision for how they should be cared for.
  6. Not regularly reviewing and updating documents. An out-of-date will, incorrect beneficiary designations and other mistakes can wreak havoc on your estate plan. Avoid a disaster after you’re death by annually reviewing and updating all your estate planning documents. Pay special attention to beneficiary designations on retirement accounts, since these will likely override whatever instructions are provided in your will.
  7. 7.       Not recognizing the power of trusts. Trusts are one of the most powerful estate planning tools at your disposal. But many people assume that trusts are just for the very wealthy. That’s simply not the case. Even people of relatively modest means may benefit from establishing a trust, especially if they have a special needs child, children from multiple marriages or other complex planning needs.
  8. 8.       Not making a plan for their digital afterlife. These days, much of our life is lived online. Not only may you want a plan for what happens to personal accounts (such as your Facebook profile) after your death, but you should also make sure that your loved ones can access financial accounts and other critical information that may exist only online. It may be wise to put together a list of your accounts, login information and passwords and store it in a safe place so that your relatives can access it in the event of emergency (such a list is useful not only after your death, but also if an accident or illness renders you temporarily incapable of managing your own affairs).

Take Charge of Your Estate Planning Today

 Estate planning is complicated. Don’t let an avoidable mistake create problems after you’re gone. Talk to an estate attorney and other advisors today to make sure that your affairs are in order.

By Chris Cooper, CFP®

About Jacqueline Maddison

Jacqueline Maddison is the Founder and Editor-in-Chief of Rancho Santa Fe Magazine. She believes in shining light on the best of the best in life. She welcomes you into the world of the ultimate luxury lifestyle.

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