Part 1: 6 Estate Planning Mistakes That Put Your Loved Ones at Risk
Many people believe that a simple will is all they need to accomplish their goals for the future. However, a flawed estate plan can create just as many headaches, heartaches, and expenses for your loved ones as having no plan. Life changes, laws evolve, and even the best intentions can fall short.
Here are six mistakes that could jeopardize your legacy and place unnecessary burdens on your family.
1. Lack of healthcare planning
Most deaths occur in hospitals or other healthcare facilities, where many patients near the end of their life are unable to make or communicate their decisions. Without a plan, families and providers can be left guessing. Advance directives outline your preferences for end-of-life care; healthcare powers of attorney appoint a trusted person to make decisions on your behalf when you cannot. Together, these documents ensure that your medical wishes are honored and can be paired with financial powers of attorney to protect your property and finances during incapacity.
2. Failure to appoint financial decision-makers
There may come a time when you need someone to manage your financial and legal affairs, either because you are incapacitated or simply unavailable for a specific transaction. A financial power of attorney allows you to appoint a trusted person to act on your behalf, ensuring that bills are paid and important matters are handled without the need for court intervention.
3. No will or trust
Without proper planning, your estate may be held up in the often long, public, and costly probate process for months or even years after your death, at a great emotional and financial cost to your family. If you have no will, a judge will apply the state’s statutory default distribution plan to determine who will receive an inheritance from you and how much they will receive. This plan may not match your wishes.
4. Lack of attention to digital assets
Without a plan for your digital assets (such as digital photos, cryptocurrency, nonfungible tokens, social media profiles, content creation accounts, and accounts associated with e-commerce businesses) your loved ones may lose access to critical documents, photos, memories, and other important family records. They may also be unable to access any bank accounts or money associated with or generated by your digital assets or accounts.
5. Failure to anticipate your children’s future divorces, creditors, or lawsuits
Although it is not fun to consider, if your children divorce, rack up massive debt, or are sued at some point in the future, their inheritance could be lost and end up in the hands of unintended people. A trust can help protect your legacy and your children’s inheritance.
6. Failure to provide for an intentional transfer of family values
Do you want to pass on more than just money to your loved ones? A comprehensive estate plan can include provisions regarding family meetings, a family mission statement, and custom planning for your loved ones so that your values will continue into the next generation. Your custom plan could include allowing loved ones to choose a charity to receive part of your accounts or property, setting money aside for future family reunions or travel, or building in provisions to incentivize major milestones such as getting married or graduating from college.
Each of these mistakes can leave your loved ones scrambling, fighting, or losing money that you worked hard to build.
The good news? With the right guidance, these risks are preventable. Contact us today to review your estate plan and ensure it reflects your life, your goals, and your family’s future.
