1. Not Keeping Documents Organized
Start your future plans off on the right foot. As with any significant course of action, preparation and organization are essential. When you are no longer around to relay important information, your beneficiaries and the managers of your estate may struggle to compile all of the information necessary for asset distribution. Dealing with the loss of a loved one is difficult enough; Maintaining a well-organized collection of vital documents can save others from further distress.
Solution: Keep your important documents in a location that is both secure and easily accessible by the person (or people) you have chosen to manage your estate. Be sure the storage location is weatherproof. As an added bonus, label your documents to make your estate distribution that much easier. For more information, follow these tips for keeping your estate planning documents organized.
One of the most common mistakes is assuming you are too young, too healthy, or lacking enough assets to complete an estate plan. This is not the case; Estate planning is for everyone. Think about your other responsibilities: rent or mortgage payments, filing taxes, grocery shopping, etc. Even when you are not up to the task, these are duties that must be fulfilled. Often, completing these obligations leaves you with reassurance and peace of mind. In the long run, procrastination only inconveniences you and your loved ones.
Solution: Get started ASAP. Do not be afraid to ask for help from an estate planning professional who can demystify the experience and tailor an estate plan to fit your needs. Many estate planning documents can be revised at a later date, so it is safe to start with the basics.
3. Only Creating a Will
If you have written a will, this is a great first step! As regulations vary by state, ensure that you have met state requirements regarding wills, such as signatures from witnesses. When writing your will, consider preferences unrelated to assets, for instance, childcare and pet care options. However, there are some elements of estate planning that are not covered by a will alone.
Solution: Estate planning is not limited to wills. Further, it is not limited to asset distribution. Did you know you could use your estate plan to make arrangements for medical treatment? Look into other estate planning tools, including trusts (revocable and irrevocable), Powers of Attorney, and advance directives.
4. Leaving a Trust Unfunded
You may find that creating a trust is a great option for preserving your estate planning wishes. When one creates a trust, either revocable or irrevocable, they are required to appoint a Trustee to manage the assets in a trust following their death. However, the ownership titles of these assets must belong to the trust, not the trustmaker (you). If the trust is created, but the titles are still in the name of the trustmaker, the trust is considered unfunded and the Trustee(s) cannot manage the assets.
Solution: When creating a trust, keep a detailed record of your assets along with ownership titles. This will make it easier to transfer ownership and will eliminate any doubt that a trust is fully funded. Seeking professional assistance may also uncomplicate the process and ensure that all of your bases are covered.
5. Failing to Update Your Plan
Change is constant for everyone. As you undergo life events, even a thorough, detailed estate plan is subject to become outmoded in some respects. One of the greatest privileges of estate planning is that various documents can amended to appeal to different circumstances – Take advantage of this! When it comes to your future, you should not just “set it and forget it.”
Solution: While planning for an occasion, such as marriage, childbirth, or homeownership, add estate plan revision to your to-do list. Additionally, make a habit of revisiting your estate plan every so often, whether yearly, bi-yearly, or otherwise. You will find that a small sacrifice of time and effort today will benefit you tomorrow.