It is said that the biggest mistake of all is to do nothing at all, and that is especially true when it comes to estate planning. A huge percentage of Americans have chosen to do nothing, perhaps because they do not understand how easy it is to fix this error.
For most Americans, preparing an estate is not that complicated. The process starts with a meeting with an estate planning attorney who will determine what the family needs and prepare the documents. According to a recent post on CNBC.com, “Don't drop the ball when planning your estate,” people who have cared for their families for decades often forget this important step.
- No will. A 2016 survey found that 64% of American adults don't have a will, and about half of these people either said they didn't need one or just haven't gotten around to it. Depending on the state in which you live and your personal situation, not having a will can result in assets going to people other than those you intend. A will is the document that states your wishes.
- No updated will. The good news is that you have a will; the bad news is that you haven’t reviewed it in a decade. You’re not alone. Many folks think their wills are “set-it-and-forget-it” documents that never need to be changed. However, our lives change. We marry, divorce, adopt children, have grandkids…the list is endless. You should review your will every two years.
- Unrealistic ideas about your heirs. When you draft your will, you should consider if your heirs are financially and emotionally able to handle the responsibility of money. They may not have the appropriate maturity and financial knowledge or may even have an addiction issue—any of which may be a serious problem when giving them a large sum of money. You should talk to an attorney about adding provisions in your will to protect them from their own issues.
- No trust documents. Wills help with the division of assets upon death, but trusts will live for a set period of time to regulate the distribution of assets. A trust can restrict the timing of asset distribution and add conditions for heirs to receive bequests—like the supervision of a pre-appointed trustee until a minor heir turns 18.
- Not naming the right executor or trustee. Many people will opt for a relative or old friend in their wills as their trustee. However, they may be your contemporaries and may not outlive you. They also may not have the time or inclination to take on the responsibilities of an executorship. Plus, appointing a relative or family friend can increase the odds of friction between heirs. Instead, you might think about naming a professional executor or trustee.
One last note: estate planning attorneys are now hearing from families where a loved one has used an online “do-it-yourself” will. A DIY will may create an unintended legacy of stress and expenses for your loved ones. Speak with an experienced estate planning attorney so that your family is properly protected.
Reference: CNBC (September 13, 2016) “Don't drop the ball when planning your estate”