Your Guide to Estate Planning: Seven Common Mistakes and Mishaps to Avoid
Estate planning is about getting your affairs in order for the end of your life and beyond.
While it can be uncomfortable to consider end-of-life wishes, no one will live forever. Whether you are creating your first estate plan or you are updating existing documents, errors can happen.
In this article, we will address seven common estate planning mistakes so you can create flawless end-of-life documents that honor your wishes and safeguard your legacy.
Mistake #1: Assuming estate planning is only for the wealthy
While estate planning is essential for those who are well-off, it’s important for everyone across the financial spectrum. If you own property or have someone dependent on you, an estate plan is needed. It addresses how, when, and to whom you want your assets distributed when you pass away.
Mistake #2: Dying without a will
For those who die intestate (without a will or living trust), the price can be high. State and local laws determine who manages and inherits a deceased person’s property that is not transferred by a beneficiary designation or by law. Family members who are entitled to inherit an intestate person’s estate must often spend significant amounts of money proving their relationship to the decedent.
Mistake #3: Neglecting to plan for incapacity or disability
Having a valid will is crucial, but it is just as important to legally appoint agents to manage your health care and finances in the event of incapacity. Health care proxies and durable powers of attorney are typically the primary means of appointing these agents, whether the incapacity is temporary or permanent. Without these documents, state and local law determines who can make decisions on your behalf and a guardian may have to be appointed.
Mistake #4: Taking a DIY approach
Plans made by individuals using self-help websites are frequently filled with mistakes. Even if the documents are completed properly, they are often executed incorrectly, making them invalid. It is crucial to hire a qualified estate planning attorney to ensure that relevant documents are properly drafted and executed.
Mistake #5: Outdated or incorrect beneficiary designations
Time passes. Your will, trust, or life insurance policy may name beneficiaries who have predeceased you or whom you no longer wish to receive these funds. Review applicable beneficiary designation forms on a regular basis to make sure the primary and contingent beneficiaries are still correct.
Mistake #6: Overlooking the impact of multiple marriages and blended families
Re-marriage and blended family situations can be stressful. Couples in these situations often fail to create agreements regarding how their assets will be divided at their deaths. Creating trusts, buying additional life insurance, and titling joint accounts can be important means for second spouses to provide assets for each other as well as their descendants at death. Planning ahead ensures family harmony and minimizes costly litigation.
Mistake #7: Not reviewing plan documents periodically
Once your estate plan is created, that’s just the beginning. This living, breathing set of documents requires periodic review and updates. For instance, the birth of a child, marriage, death, or divorce will typically require a change to existing plans. To avoid obsolescence, you should re-examine your estate plan with a professional every five years or after a major life event such as a death or marriage.
Without a plan in place, settling your affairs could have a stressful and costly impact on your loved ones. If you need more estate planning resources, our caring professionals are here to help. Please contact us anytime.
About Batchelor Brothers Funeral Services: As a leading African American-owned and operated funeral and cremation organization, Batchelor Brothers Funeral Services has provided a ministry of care to thousands of grieving families. We promise to provide our highest level of distinguished service and respect to families who entrust us to honor their loved ones. With two convenient locations serving North and West Philadelphia, it is always our pleasure to be of service. For more information about our funeral, cremation, memorial, and repast services, please visit batchelorbrothers.com.