Many people make the biggest estate planning mistake by not, first, sitting down to make a will or estate plan. Others rely on templates or on-line wills to guide these important decisions that affect you and your family. As Forbes Magazine notes, even celebrities such as Prince, Whitney Houston and Steve McNair did not update their wills, despite having access to legal guidance, a significant fortune, and more than ample resources to do so. This resulted in serious consequences for their families, which has diminished their estates and was avoidable with simple proactive planning. There are many common estate planning mistakes you can avoid, with proper guidance. Here are some of the most common estate planning mistakes and ways to avoid them.
The Most Common Estate Planning Mistakes
Some of the most common mistakes that everyone, regardless of their age, income bracket, or line of work, should avoid when it comes to estate planning are outlined below.
- Updating Your Will—A will should be updated every two to four years, or whenever there is a major life-changing event, such as the birth of a child or grandchild, divorce or death in the family, for example. As we grow older, our wishes may change, as the relationships, careers, finances, and marriages within our family change. These changes should be evaluated, on a regular basis, to determine if changes are needed.
- Utilizing On-Line Templates or Low-Cost Alternatives – You get exactly what you pay for, so if you’re trusting an online platform or template, you’re probably not going to have a will or trust that will best serve your needs, or potentially withstand contestation. More importantly, these online platforms fail to provide you with legal guidance about your specific familial situation, financial considerations, scenarios, and specific wishes.
- Failing to Take Minors or Young Adult Children Into Account—Will your 18-year-old child know what to do with a lump sum $100,000 inheritance? If, after you pass, your 12-year-old child’s other parent passes away, do you have a plan for guardianship? If your child is enrolled in college, will the funds you leave be enough to cover the rest of their tuition and living expenses? Parents and grandparents with minor or young adult children have all the more reason to update their wills regularly and work with experienced estate planners to ensure that they do not omit important aspects of their wishes.
- Not Funding a Living Trust—Having a living trust is a great way to ensure that the assets you leave to your loved ones avoid the probate process, avoid possible excessive taxation and are used for your intended purposes, but the living trust MUST be properly funded or it will not act as intended and will not avoid probate.
- Leaving Assets to a Person with Special Needs – If you have a family member with special needs, you may think that it would be a wonderful gesture to leave them a large sum of money for their care. Often, this is not the case. This scenario may actually do more harm than good, as the person with special needs inherits assets that prevent them from the public benefits they depend on.
- Documents for Health Care Decisions – If you are incapacitated due to an accident or illness such as Covid, will your family agree on the care you desire? Unfortunately, emotions can cause a lot of conflict among family members, during a time of crisis. It is much easier to consider these decisions ahead of time so that the family can focus on executing those decisions and providing comfort to one another.
Myths About Estate Planning
There are also many myths and misconceptions about estate planning. For many people, these reasons may cause you to delay considering estate planning. The most common myths are:
- MYTH #1: They believe that working with an estate planner is too expensive;
- MYTH #2: They do not believe they have beneficiaries;
- MYTH #3: They believe that estate planning takes up a lot of time and money
- MYTH #4: They think that their family members will behave amicably and will sort out the estate by themselves without legal guidance; and
- MYTH #5: They believe that they do not have enough assets to make estate planning worthwhile.
All of these myths can be discussed with your attorney so that proper planning can take place. This is a truly timeless gift you can give your family.
What You Can Do Now
If you already have a will or estate plan, an estate planning attorney should review it with you regularly, to be sure that it is thorough for your changing needs. Too often, families recognize estate planning mistakes after a crisis occurs. More importantly, if your will or estate plan is incomplete or out of date, it will likely be ineffective. Estate planning is an important process and even many individuals, who already have a will, could benefit from a simple review or evaluation to ensure their current needs are covered properly. We have developed a comprehensive Free Guide to Estate Planning that provides information on all of these topics and more! The free guide also reviews questions and considerations like:
- Do You Need a Will or Trust?
- Estate Planning for Blended Families
- Estate Planning vs. Long Term Care Planning
- Estate Planning for Special Needs Families
- Estate Planning for LGBTQ
Don’t delay – schedule a free 15 minute consultation with a Maryland estate planning attorney today. We have been serving the legal needs of our community for over 65 years and are dedicated to helping take the weight off your shoulders.