6 Common Estate Planning Pitfalls You Must Avoid

An estate plan holds all your wishes to be granted after your death. It ensures your assets go to the people you choose and helps minimize estate taxes. Contrary to popular belief, estate plans aren't just for the elderly or wealthy; everyone 18 and older should have one. An estate plan should include a will, trust, power of attorney, beneficiary designations, a letter of intent, and guardianship designations if needed. Another myth is that creating an estate plan is a one-time task. In reality, there are many mistakes you can make when drafting your estate plan. Here, we list 6 common ones to watch out for.

1. Never creating an estate plan 

Procrastinating can lead to many headaches and heartache for your family if something happens and your wishes aren’t documented. Thinking you still have time can be risky because anything can happen at any moment. Without an estate plan, the state might take over, and your loved ones could end up in probate court, which is often a long and costly process. So, it’s best to be prepared and get your estate plan in place.

2. DIY estate planning 

Many people think they can handle it themselves, but they often leave out important documents or make errors that cause complications later. Estate plans are more complex than they seem, and doing it yourself can end up being useless or costly for your family. A family law attorney who specializes in estate planning can help maximize your legal protections and tax benefits. They can also ensure that your accounts and documents, like beneficiary designations, are properly coordinated. So, it's definitely worth getting professional help.

3. Keeping your estate plan a secret

It's crucial to let people know you have an estate plan in place, so they know to follow it if something happens to you. Share your intentions and how they are involved in your will to avoid any surprises or conflicts when the time comes. Communication is key to ensuring everything goes smoothly.

4. Overlooking digital assets

People often overlook their social media accounts, cloud storage, digital files, and cryptocurrencies when creating an estate plan. It's important to designate a digital fiduciary who can access and manage these digital assets after your death. This ensures someone can close your accounts and retrieve any important documents or information. So, don't forget to include your digital life in your estate plan!

5. Appointing the wrong executor or trustee

Executors or trustees in a will are appointed to take legal control of assets for the benefit of another person (the beneficiary). Choosing someone who is biased or has a conflict of interest can lead to problems when it's time to distribute your assets. It's important to select someone responsible, trustworthy, of age, and who agrees to take on the role. It is important to note that this person may change over time. 

6. Not updating your plan 

Outdated estate plans might not reflect your current wishes, so it’s important to update your plan as your situation changes. Life events like marriage, divorce, acquiring new assets, having children, children becoming adults, moving to a different state, and the death of a loved one can all impact your estate plan. If you don't update it, assets could end up with unintended beneficiaries, and guardianship details might become irrelevant. Additionally, moving to a different state can affect your estate plan, as each state has its own estate and income tax laws. States can be either common law property states or community property states, which affects how assets are transferred. Keep your estate plan current to ensure it always aligns with your wishes.

Having an estate plan is vital to securing the future of you and your loved ones. Waiting too long or making these common mistakes could cause your family headaches on top of heartache. Contact Z Family Law at (301) 781-7930 for your estate planning services today!