We frequently come across difficult situations that arise out of simple mistakes people make in estate planning. There are many estate planning tips we could include. The few below help cover your bases…
Common Estate Planning Mistakes
#1: Verbal Instructions
A common mistake people make involves leaving instructions with someone you know, instead of putting your wishes in a will.
One mistake people make is to trust someone close to them to make sure that their wishes are carried out. While both parties may be well-intentioned, there are always possible extenuating circumstances. For example, there is no guarantee that the people entrusted will not pass away first. Secondly, it is possible that without documentation, they may not understand or remember your wishes correctly. Having a valid will in place will help your loved ones easily carry out what you want.
#2: Failing To Update Beneficiaries
Designating beneficiaries incorrectly, or failing to update them when circumstances change is another common mistake.
Do you know who your beneficiaries are, and how your assets are titled? This is an important question. Make sure that your beneficiary designations (in policies and on assets) matches what is spelled out in your will; generally, the asset will be passed according to what is in the policy. Additionally, make sure you understand how each beneficiary is titled, and make sure to review your will every year or after major life changes. Circumstances change all the time, and your will should change accordingly as needed.
In the video below, Brian shares a story regarding a woman who almost lost her house to estranged step children with whom she and her late husband had lost touch!
#3: Failing To Have Power Of Attorney
Not having a durable financial power of attorney is another common mistake. This power of attorney designates an agent to manage a person’s finances if the person becomes incapacitated, and it does not require the involvement of the court. Without it, should a person become incapacitated and be unable to handle their own financial affairs, a very cumbersome and expensive guardianship proceeding will be needed to appoint a guardian to manage that individual’s finances under the close supervision of the court. Another mistake in not having a health care power of attorney naming an agent to make health care decisions for you should you become incapacitated.
If you inherited a house involved in an estate where there is no will or planning, we can help. Call us to hear about options regarding your estate.