Common Estate Planning Mistakes to Avoid
"Planning is bringing the future into the present so that you can do something about it now." - Alan Lakein
This quote is particularly relevant to estate planning, as it highlights the importance of taking action now to prepare for the future. Estate planning allows you to bring your wishes for the distribution of your assets and the care of your loved ones into the present so that you can ensure that your wishes are carried out in the event of your incapacity and after you're gone.
In this blog post, our Morgantown estate planning attorney, Brianna W. McCardle, discusses common estate planning mistakes to avoid.
1. Failing to plan: One of the biggest mistakes is not having an estate plan in place at all. Many people put off estate planning because they believe it is only necessary for the elderly or the wealthy, but everyone should have an estate plan. This is especially true for individuals with minor children, people with blended families, and people with dependents who receive governmental or social benefits. If you pass away without a Will, the law will make a distribution of your estate for you - this is known as “intestate succession” or dying “intestate”. The default of intestacy may not be what you want, so even if you think you don’t have a lot of “stuff” to distribute, you should always have a plan in place to ensure that what you do have is distributed to the people you want to have it in the way that you want it to be distributed. This also ensures that the person you trust to distribute your assets will be the person who will be handling your estate. A well-drafted estate plan can also ensure that the person you trust to handle your financial affairs will be able to take care of your assets in the event of your incapacity, and further, that the person you trust to make medical decisions for you will make those decisions according to your wishes when you cannot make those decisions for yourself.
2. DIY estate planning: While DIY estate planning may seem like a good way to save money, it can often result in errors or omissions that can cause problems down the road. It's important to work with an experienced estate planning attorney to ensure that your estate plan is legally sound and meets your specific needs. The forms that you find online for DIY estate planning are a one-size-fits-all solution. These forms are problematic because they don’t consider your individual circumstances, needs, or goals and are not always state-specific. Our Morgantown estate planning attorney, Brianna W. McCardle, has assisted numerous people in the creation and execution of their estate plans.
3. Failing to update your estate plan: Your estate plan should be updated periodically, particularly after major life events such as marriage, divorce, the birth of a child, or the death of a loved one. Failing to update your estate plan can result in unintended consequences. In general, we advise our clients to review and update their estate plans any time there is a major life event, or at minimum, every five years.
4. Choosing the wrong people to carry out your plans: The personal representative of your estate will be responsible for carrying out your wishes after you're gone. The agents named in your Power of Attorney documents will be in charge of handling your affairs and making decisions for you when you are incapacitated and cannot make decisions for yourself. It's important to choose someone who is trustworthy, competent, and willing to take on the responsibility.
5. Ignoring tax implications: Estate planning can have significant tax implications. Failing to plan for these taxes can result in unnecessary costs and complications for your heirs.
6. Not planning for incapacity: Many people focus solely on what will happen to their assets after they pass away, but it's also important to plan for incapacity. This includes establishing a Power of Attorney, Living Will, and Medical Power of Attorney. It is also important to be specific with your wishes in these documents. Assuming that your loved ones know what your desires are is never a good idea. The more specific you can be, the better.
7. Leaving out digital assets: Many people forget to include their digital assets, such as online accounts and social media profiles, in their estate plan. It's important to plan for the management and distribution of these assets during your incapacity and after you're gone.
Avoiding these common estate planning mistakes can help ensure that your wishes are carried out, that your affairs are managed in the event of your incapacity, that your desires regarding health and end-of-life care are honored, and ultimately, that your loved ones are provided for after you’re gone. A little planning now can save a lot of heartache in the future, and the importance of a properly-drafted, well-considered estate plan cannot be understated.
