I certainly understand why people put off planning their estates. It’s natural to feel an aversion to thinking and talking about what will happen after you’re gone. For many, it can be overwhelming and emotional.
None of these things, however, should stop you from doing it and making sure it’s done well. Whether you handle the documents on your own or hire an attorney, there are a few pitfalls you should be aware of before you start.
1. Waiting to Start
Estate planning is one of those things we keep putting off, always saying there will be time. Unfortunately, we don’t know just how much time there will be. If you value your property and the livelihood of your loved ones, don’t delay any more. You’ll feel much more at peace knowing that, should anything happen, your affairs are in order and your family will be taken care of.
2. Setting it in Stone
Wills should not be carved in stone and set away to gather dust – they should be dynamic documents that reflect changes in your life and your finances. I’ve seen many problems arise from the fact that a client’s will was not updated to include new spouses, new children or changes in property ownership. Anytime your life significantly changes, so should your will.
3. Failing to Communicate
Don’t keep your plans a secret – it only causes rancor down the line. Though it may be slightly uncomfortable to have those conversations, it’s better to explain things now than not at all. No one likes to imagine their family squabbling or having fall-outs with one another after they’re gone. Make your intentions clear so that you have the opportunity to communicate your wishes and your motivations.
4. Not Figuring in Tax
The larger your estate, the higher the estate taxes. When planning, any people forget to include taxes in their calculations. Depending on your assets, your beneficiaries may end up having to liquefy or go into debt in order to afford the taxes. Take the necessary measures to ensure that your gifts don’t become burdens.
5. Inheritance Choices
Consider carefully who will inherit your money and assets and how much each one will get. You should think about each beneficiary’s lifestyle, personality, age and future before making any decisions. One failsafe measure is to hire a trustee to distribute inheritances in a way that would guarantee that the money is used the way you would like it to be.
6. Executor Choice
Managing your estate, distributing your assets and paying any remaining debts or costs associated with your death can be a highly demanding job. Not to mention that it can also result in a significant conflict of interest if the executor is also a beneficiary. One thing is certain: your choice of executor should never be a surprise. Make sure that whomever you choose is not only capable of the task, but willing to take it on.
7. Record Keeping
Important documents are often squirreled away in strange places. That’s all fine and good when you know where they are, but what happens when you’re not around to tell your executor or your children that tax returns and insurance information is in a shoebox at the back of your closet? Make sure that all relevant documents and information are in one easily-accessible place, and that the right people know where that place is.
8. DIY Enthusiasm
There are many parts of estate planning that are entirely personal and must be done on your own. However, if you aren’t an expert, you may find yourself lost in a murky sea of legalese and confusing documents. The last thing you want is to make mistakes that cause your plan to be carried out incorrectly. Be sure that the documents accurately reflect your wishes.
9. Lack of Secondary Beneficiaries
Sometimes the primary person you bequeath certain assets to might not be able to take them on. It may be that a beneficiary has died since you last updated your will, or that they are simply not interested in inheriting something you left them. For valuable assets, always list secondary beneficiaries to prevent your executor from having to make any difficult choices that could cause acrimony amongst family members.
10. Failure to Sign a Healthcare Directive
If health conditions cause you to be incapable of making or communicating decisions while you’re still alive, you need to name someone whom you trust to do so for you. This includes your medical wishes in case you’re terminally ill or unconscious. It can be extremely trying for family members to try to guess what you would want. Your plans should make it so they don’t have to.
Estate planning is really about living; it’s about feeling settled and assured about your future and that of your loved ones. You can fully enjoy your life when you know that you’ve made wise and responsible decisions about everything you worked so hard to accomplish.