For many people, estate planning requires careful thought. Who will get your assets? Who will be the guardian of your minor children? And who will make health care and financial decisions for you if you are unable to do so?
These are just some of questions you must answer. But while you create or update your estate plan, it is important to avoid missteps. Those mistakes could lead to disputes among your heirs, and, possibly, litigation.
Failing to share your plans with family
Here are some of most significant mistakes when it comes to estate planning:
- Failing to create an estate plan: Many people do not want to think about their mortality, setting aside this important task. Without an estate plan that includes a will, the state decides who gets your assets. How will you feel if you learned the state awarded a large chunk of your estate to your estranged sibling with questionable values?
- Neglecting to share your plans with your family: In order to fend off any family conflicts, let your heirs know of your plans and what you hope to accomplish. This includes educating them regarding the choices you made. For example, with a trust, inform them that this tool is meant to protect them rather than punish them. A spendthrift trust is a good example of this.
- Failing to name durable powers of attorney: Naming a health care power of attorney and financial power of attorney represent safeguard measures in case you become physically or mentally incapacitated. These people will make the decisions for you regarding your health care and finances.
- Not updating your estate plan: Not doing so could lead to litigation involving beneficiaries and disgruntled family members. Whenever a life change – such as divorce, remarriage and birth of a child — surfaces, it is critical to update your estate plan. Other important matters to consider include naming a new guardian for your minor child or a new executor.
- Naming the wrong person as guardian of your children: You want to make sure the guardian has the financial capacity to raise your child, while providing a stable and loving home. You also want to make sure this person has the energy to raise a child.
By walking on an estate planning path forged by solid decisions, you will avoid missteps.
Care in decision-making
Before creating an estate plan, consider how your heirs will benefit from it, then put those plans into place. Take great care in making your decisions. Doing so will help you avoid mistakes. And remember that an estate plan needs regular attention.