ESTATE PLANNING: ARE YOU MAKING THESE COMMON MISTAKES?

The most common estate planning mistakes are easy to avoid. In knowing the common errors that often occur during estate planning, you can minimize the headaches and stress that can accompany the process. With that in mind, the top 5 common mistakes include: 

1. Failing to Create a Plan.

This is the biggest mistake of all.  Estate planning is not just for the rich. Most people have something of value, beyond cash assets, like jewelry, a baseball card collection and even beloved pets that they wish to pass along. Failing to create your estate plan can leave family members in a panic about what to do next and who to give what.  All your hard-earned assets can end up in the wrong hands.  Worse, your cash accounts and valuables can be distributed not according to you or your family, but by State Law.  And, did you know that most family squabbles are over things not of high financial value but of high sentimental value?  Your estate plan can alleviate costly court battles and the hurt feelings of squabbling family members.

Don’t let the fear prevent you from estate planning.  For some people estate planning may needlessly bring up negative feelings about the end-of-life.  So, it is easy to understand why many people avoid this topic. At JMershonlaw we guide you every step of the way.  

2. Failing to Discuss Your Estate Plan with Family and Friends. 

 When loved ones are dealing with your passing there should be NO surprises and NO treasure hunts!

One of the biggest mistakes a person can make in estate planning is leaving behind major surprises for your loved ones to discover and deal with after your death.   Equally problematic is when grieving family members are sent on a treasure hunt trying to locate important documents regarding your savings and investment accounts.  If important cash accounts and insurance policies are not found it is as if they don’t exist. Sit down with family and key people named in your plan, to have a conversation about:

 1) Where to find your documents and your asset information.

 2) Explain how your estate planning documents work and what is contained within. 

Knowing facts such as who acts on your behalf and more importantly who gets what and when alleviates stress and confusion for your loved ones.  You should also ask people in advance if they are willing and able to act on your behalf should you name them as agents in your documents.

3. Not Thinking about Your Children’s Future. 

Most people would not intentionally exclude their children during the estate planning process. However, if your Will or Trust is not set up correctly, this may be the result.  Second marriages where money is entirely left to a spouse could leave your own children out in the cold when it comes to your assets.  If money is not put in a trust for young children, it could be squandered on things that you would have never intended. Simple provisions in an estate plan can protect your money for your children when you are no longer able to do so.   Naming trustees and guardians for young children helps to ensure that they and your assets are protected. If necessary, you may also set up a special needs trust which is intended to allow financial resources to remain available to help a disabled child. Remember if you don’t make these decisions a Court of Law will.  Why allow a Judge who knows neither you or your children to decide their future.

Did you know that transferring your house to your child/children during life can cause tax issues upon your death.  It is important to consult with legal and tax professionals to avoid giving your children’s inheritance to the government.  This is not about finding loop holes, but rather avoiding pit falls in estate planning.

4. Forgetting about Final Arrangements

When a loved one passes away, the last thing friends and family should be worried about is your final wishes.  Your loved ones want to get things right for you.  You not only can make your directives known via your Will about burial or cremation, but you can leave many details for your memorial service.   This is done via a great tool, simply named “The Memorandum”.  The Memorandum is cited in your Will, written completely by you and if it is signed and dated at the end holds real legal authority.  The best feature of a Memorandum is that you can change it at any time without changing your Last Will and Testament. 

A Memorandum, can provide the means to advise Executors and Trustees as to how specifically you wish to gift personal property, often generalized in a Will.  You can also write messages to loved ones and even plan your funeral service complete with songs, venue and verse. By putting these wishes in writing, you are limiting some of the stress your loved ones shall face while they are mourning.  Judges like this document too.  Remember, you can change it anytime you wish, and if it is signed and dated at the end, a Judge can use it to settle disputes.

5. Failing to Update Your Documents

A common misconception is that creating a Will one time is all you shall ever have to do.  We all watched those movies where the Will from 50 years ago is found in the attic.  The family then all gleefully becomes millionaires.  Well, that is just not a best practice for Estate Planning.   While Wills can stand the test of time, there are many events that can occur which can change how your Will or Trust will be interpreted. Your estate plan needs to be kept current to make sure it reflects life’s changes.  Events that require you to update your estate plan may include: marriage, divorce, birth of a child, death of a named guardian or death of a beneficiary. To make sure your estate plan reflects your current circumstances it is recommended that documents are updated at least every five years.

Always remember that documents should be kept safe from fire and water and be easily accessible (not in a bank deposit box): share a second set of keys to a document safe (or not lock them at all), provide a password to your computer to easily access all digital accounts.

Estate Planning once completed can be put away safely and forgotten about until significant changes in your life occur.  It is the best insurance policy you can leave to your loved ones.

Please call JMershonLaw (484) 875-3115 to make your appointment to discuss how you can quickly and effectively put in place a plan that suits your needs.