Estate planning is important for the protection of individuals and their family members. The right documents allow a person to leave a positive legacy. They can also secure protection for themselves in emergency scenarios and provide support for their dependents even after their death.
However, mistakes during estate planning are relatively common. When a family depends on the security provided by an estate plan, avoiding common mistakes is of the utmost importance. The five following common mistakes are easily avoidable with the right support.
1. Indefinitely procrastinating
A surprising number of adults do not have any estate planning documents in place. They keep waiting for some future event to draft their documents. They may eventually die without an estate plan, leaving their loved ones scrambling and potentially unprotected.
2. Failing to keep documents updated
Drafting a will and other estate planning documents is a critical step in the right direction. However, people often overestimate how long those documents adequately meet their needs. Testators may want to review their documents every three to five years to account for any changes to their families, personal holdings and medical circumstances. Updates are also necessary after major life events, such as divorce, marriage or the birth of a child.
3. Failing to name contingent beneficiaries
Testators typically want to provide specific assets for each of their chosen beneficiaries. However, the potential exists for beneficiaries to die just before or at the same time as the testator. Including contingent beneficiaries to inherit the assets intended for a deceased beneficiary is an important estate planning step that many people overlook.
4. Only planning for death
An estate plan can control what happens with personal property after an individual dies. It could also include documents that protect people in emergency circumstances. Expanding an estate plan to include powers of attorney, advance directives and other living documents can help people connect with support if they experience personal emergencies.
5. Leaving direct inheritances for the wrong parties
Minor children, pets, people in unstable marriages and those with special needs may be among the pool of intended beneficiaries for an estate. They are also vulnerable to poor outcomes if they receive a direct inheritance. Assets could be vulnerable if beneficiaries divorce or could be under the control of a parent or guardian. Other times, an inheritance could cut an individual off from state benefits. Creating a trust is often helpful for those who want to provide support to companion animals or loved ones in challenging situations.
Testators who learn from the mistakes of others are in a position to create authoritative, helpful estate plans. Drafting and occasionally revising estate planning documents can give people peace of mind and protection in challenging situations.