Do you have an estate plan in place? If you do, congratulations. You are off to a great start. If you do not, it is important that you create one as soon as possible! An estate plan provides peace of mind, ensuring that your future, assets and loved ones are protected.
Unfortunately, an estate plan can also be a fertile ground for some very costly mistakes. Whether these mistakes are the result of oversight or poor planning, estate planning mishaps can undermine your wishes and significantly impact the financial legacy you had hoped to leave behind. These can also subject your loved ones to unhealthy conflicts while they’re also grieving — and that’s a big burden.
Here are common mistakes people make after creating their estate plans:
Failing to update their estate plans on a regular basis
An estate plan is not a set of documents that you create and forget. Rather, an estate plan is a living document that needs to be updated according to your life events, changes in existing laws and shifting goals.
For instance, if you marry or divorce, it is important that you update your estate plan to reflect these major life changes. Additionally, if you relocate to a new state, it is important that you review estate planning instruments like your will, trusts and powers of attorney and ensure that they are valid in your new state. Changes to state and federal laws should also prompt an immediate update to your estate plan.
Failing to take note of special circumstances
Besides specifying what you want to happen to your assets when you pass on, it is important that you include special circumstances in your estate plan.
For instance, most estate plans include medical powers of attorney that indicate your wishes with respect to the use of life support should you be incapacitated. If your medical power of attorney does not include this directive, your loved ones may need court intervention to make decisions on your behalf.
As unsettling as some people find thinking about the end of life to be, pretty much everyone wants their assets and estate to go to the right people when they pass on. Estate planning allows you to decide what will happen to your assets when you are no longer around to make crucial decisions.