Estate planning is a complex process that typically requires consistent attention over time. You must not only put your end-of-life plans and preferences into a formal, enforceable document as soon as possible but also reassess your end-of-life plans every few years. These small steps ensure your personal goals still align with the contents of your Will, Living Trust, or Estate Plan.
The goal of estate planning is to help the estate owner’s family avoid as much of the probate process as possible. Unfortunately, many common mistakes can cause an estate plan to be more difficult to manage than actual probate. If you are developing your end-of-life documents, do your best to avoid the following devastating mistakes.
Failing to Update Beneficiary Information
Imagine you started working at your job twenty years ago, and your employer-provided life insurance required you to name a beneficiary. You named your spouse, but ten years later, you got divorced. If you forget about this lingering beneficiary designation, your ex may have the right to compensation from this life insurance policy after you die instead of your current spouse.
This is a very general example of a common problem with estate planning throughout the country. Estate owners must carefully reevaluate their estate plans consistently over time. They may need to adjust or change beneficiary information to account for changes in relationships, deaths, and other events within the family.
Signing Without Understanding
It’s not uncommon for an estate planner to agree to legally binding terms without fully understanding what they are signing. If you are self-conscious about asking for clarification of your estate planning process, do not worry. Your estate planning attorney’s job is to clarify anything about the process that you do not understand, and they have likely heard the question you’re about to ask many times before.
Be as transparent as possible with your attorney, and do not shy away from asking for clarification or more detail about certain aspects of your case. Your attorney should help you approach the estate planning process with confidence, so take advantage of their experience and make sure you understand everything about any document before signing.
Forgetting to Fund Revocable Trusts
When you develop a Revocable Living Trust, you are placing ownership rights over and responsibility for your property into a trust, naming a Trustee who will act on your behalf under certain conditions, such as after your death. However, once you create a Living Trust, name a Trustee, and designate all of the contents of the Living Trust, you must still fund it by individually assigning ownership of each item listed in the trust.
This may sound like a minor detail, and it’s not difficult to accomplish for most properties such as bank accounts, real estate, vehicle titles, and physical items. You fund your Living Trust by arranging these ownership changes for each item listed in the Trust. However, if you forget to fund your Living Trust correctly, then you may not be able to ensure your family can avoid probate after your death.
Failing to Align Beneficiary Designations
You need to manage beneficiary designations very carefully. Many investment accounts, retirement savings accounts, stock option accounts, and other assets allow you to designate a beneficiary who will assume ownership of these assets after your death. If you designate a beneficiary, then develop an estate plan or Living Trust that conflicts with these preexisting beneficiary designations, your affairs may need to move to probate. In this case, the decision will fall to state law instead of your preferences. Always revisit old accounts when creating your estate plan so you can identify and modify any conflicts before they can cause problems for your family.
Forgetting to Modify the Plan
An estate plan is a dynamic document that you can adjust, modify, alter, or cancel at virtually any time. After creating an estate plan of any kind, be sure to revisit it regularly, think carefully about how your life has changed since you first drafted the plan, and determine whether any changes are in order. The more consistently you update and clarify your plan, the more likely it is to reflect your true final wishes upon your death.
Neglecting to Work With an Estate Planning Attorney
While you may be able to draw up a seemingly reasonable estate plan on your own, you will never be able to address the breadth of detail that you can expect from an estate planning attorney. Hiring legal guidance for your estate planning process helps to ensure your plan is as complete as possible and as enforceable as possible. Failing to hire an attorney to help you draft your estate plan could result in a legally meaningless, unenforceable document that does nothing to preserve your final wishes. If you want to develop a comprehensive and reliable estate plan, our estate planning attorneys are available to assist you.