Try your best to avoid these estate planning mistakes!
After your passing, you want everything to be in order so your loved ones will not have to struggle with or become lost in a tangle of legalities. Unfortunately, this is a real problem for many families, and it leads to disputes. All of this is due to a lack of planning.
One thing you need to know is that estate planning is not just for the wealthy. This is an essential step anyone should take if they want to make sure their assets will be distributed according to their will.
A Caring.com survey from 2024 found that two-thirds of Americans don’t have a will or any estate planning documents in place. This means we should immediately address the situation, and before you start establishing your will, you must know about these estate planning mistakes.
1. Planning by yourself
Maybe you’ve decided that you don’t want to spend money on this and are ready to take matters into your own hands. After all, you have access to the internet, which means lots of information about the topic. What can go wrong, right?
Even if, at first glance, it might seem like a good idea, taking care of this on your own is one of the worst estate planning mistakes. You might not spend money in the beginning because you are doing all of it yourself, but over time, this can be a costly mistake.
Most of us don’t have legal expertise, and the lack of it can cause some trouble. Estate planning documents like wills and trusts are based on complicated legal language with specific implications. If you don’t know what you are doing, you might cause a disaster later.
Even more, working with an estate attorney can save you from unexpected situations that might arise. Life is full of surprises, so it is better to be prepared.
Keep in mind that estate planning laws vary significantly from state to state. An attorney will be familiar with your state’s probate laws and tax regulations, and they will be able to tailor the perfect plan for you.
2. Missing the documents you need the most
This is one of the estate planning mistakes many of us make, but if you want a well-crafted estate plan, you should avoid it at all costs. When crucial documents are missing, the chances that your plan will fail are so much higher.
There are some documents you should keep in one place, such as a durable financial power of attorney, a last will and testament, funeral instructions, deeds or loans for large assets, beneficiary designations, proof of identity, and some others.
Having all of them will help the executor understand your wishes and assure a smoother and more accurate distribution of your assets. Also, after your passing, your loved ones will be focused on mourning and grieving. It is a good idea to have everything in place and give them time in these hard moments.
Try to avoid this one of the estate planning mistakes, and the whole process will run smoothly and without conflict.
3. Procrastination
For most of us, estate planning is not a priority, and because of this, we tend to postpone a lot. But procrastination is one of the biggest estate planning mistakes, and we are here to tell you more about it.
Over 40% of Americans say that they are waiting for a medical diagnosis before they start creating a will. But this is not the best strategy. Life is unpredictable, and a stroke or a heart attack can happen at any time.
Creating a plan beforehand will give you and your family peace of mind. We bet that you want to have a secure future and enjoy life as much as possible. Also, starting early will give you the chance to make an informed choice. When you are under pressure, you don’t have much control, and this may lead to leaving these choices to the state’s default laws, which may not align with your desires.
The lack of an estate plan might result in a lengthy and costly probate process. Legal expenditures and other tax ramifications might drastically lower the value of your estate.
This is why you should take care of this and never make this one of the estate planning mistakes. Procrastination can truly mess up your plans.
4. Neglecting digital assets
We live in the digital age, so some of us might have digital assets such as cryptocurrency, digital files, cloud storage, and social media accounts. Many people forget about digital assets, but this is one of the estate planning mistakes you can easily avoid.
Physical property has clear ownership trails, but digital assets sometimes do not. With explicit directions, your loved ones may be able to locate and claim your digital assets; in this way, you can avoid frustration and conflicts.
Please don’t underestimate social media accounts. This is one of the estate planning mistakes most people make, but these accounts act as a digital legacy, and they manage to offer people a glimpse into your life and personality. You should take care of your social media accounts and protect them from unintended access or even misuse.
5. Not updating your plan
Life is an ever-changing journey, full of unexpected turns and various milestones. Your estate plan is a document that acts as a roadmap for your estate after you are gone, but keep in mind that thinking about it as a static document is one of the biggest estate planning mistakes.
You need to keep your plan updated based on the major events that happen in your life. Marriage, divorce, the birth of children or grandchildren, the purchase of significant assets—all of these mean you should revise your estate plan. We are sure you don’t want to unintentionally exclude a grandchild just because you updated the plan.
So try to regularly review your plan and keep it updated with your current life. In this way, you can make sure your loved ones will know how to handle the situation when the inevitable happens.
6. Keeping documents in a safe deposit box
A safe box might seem like a good idea. In this way, you can keep your most important documents safe, right?
But what if something unexpected happens and your loved ones will need the documents, but they will not be able to access them without following complicated steps or even needing court orders to access them?
This type of delay will only stress everyone while they are already having a difficult time. You probably want your relatives to have smooth access to your estate plan, and this is why your advisor or a trusted family member should be able to access these documents easily.
We know that estate planning is not the easiest thing and because of this getting help is the best strategy. This is how you learn how to make the best decisions and be sure that you will leave everything in order.
If you want to learn more about estate planning and how it works this book might be a good read: Estate Planning Made Simple: The Comprehensive Guide to Mastering Living Trusts, Safeguarding Your Wealth, and Protecting Your Loved Ones
You should also read: Healthcare: Top 10 Most Affordable States for Seniors
