Are you haunted by what you have or haven’t done with your will? Many people who have had a will drawn up confess they aren’t really sure what they signed. Others don’t follow through on important next steps that cause problems later. The bottom line is, it’s important to get estate planning right. Otherwise, your family can wind up paying the price for it later in money and heartache, and your wishes won’t be carried out when you’re gone.
While do-it-yourself may be fine for home repair, estate planning can be complicated. That’s why it’s important to work with someone who knows what they’re doing. An experienced professional can help you put your affairs in order and avoid common mistakes like these.
Mistake #1: Not understanding your plan
The most common mistake by far is not understanding your estate plan. Unfortunately, what may seem like legal gobbledygook can have huge consequences down the road if you don’t understand what you’re signing or what else is needed to execute or maintain your plan. A Generation Law survey found that 32% of people feel unprepared to handle end-of-life issues. Still, the need for a will is undeniable, and while you don’t need to speak legalese, you do need to understand the basics.
The solution is to work with an attorney who can explain things to you in language you can understand. It also means being an advocate for yourself. Speak up and ask questions, rather than relying on your attorney to include everything you need and want. It’s vital that you understand how your estate plan works, so have your attorney walk you through it, and take notes on the decisions you make together and any required next steps for you.
Mistake #2: Not updating the beneficiaries in your will
Think fast: When was the last time you updated who gets what in your will? Five years, 10 years, never? Once you create a will, it’s important to review it every couple of years and after major life changes. Otherwise, your assets could wind up with someone unintended, like an ex-spouse or the estate of someone who’s died.
Keep in mind that your will doesn’t cover assets that have their own separate beneficiaries, like retirement accounts, annuities and life insurance. So when you update your will, be sure to also update the forms for your other assets. Beyond that, if there are other life changes, like a new job, a new home or changes in net worth, it’s time to review your plan again.
Mistake #3: Trust issues
Most people think a will controls how all of their assets will be distributed when they die. The truth is, your will doesn’t include jointly held assets, like a house; assets with designated beneficiaries, like life insurance; or assets that are held in trust, like a brokerage account. To help protect these assets, your estate planner may suggest setting up a trust. Picture a trust as a bowl of candy – the assets in the trust are pieces of candy, and the bowl provides instructions on who can eat the candy and when.
There are a variety of trusts for a variety of purposes, like providing for the care of a disabled adult child. Many people create what’s called a living trust, or revocable trust, to protect their assets from the time and costs of probate court. One common mistake, however, is that people neglect to transfer new assets into their trust over time. Just like beneficiary designations, assets like real estate, vehicles and financial accounts require updating paperwork to reflect they’re now part of the trust; otherwise, your family can wind up dealing with legal headaches after you die. Your estate planner should walk you through the necessary steps so you can reap the benefits and avoid the pitfalls of creating and maintaining a trust.
Sounds like a plan
These are just a few of the common mistakes people make in estate planning. The fact is, you can avoid all of them by working with an experienced estate planning attorney, someone who will take the time to explain your plan to you in plain English and help ensure your assets are distributed according to your wishes. To get started, give us a call.