Failing to Plan is Planning to Fail — Common Estate Planning Mistakes
Unfortunately, when it comes to checking tasks off your to-do list, estate planning is probably at the bottom of the list. According to legal services website Rocket Lawyer, 64% of Americans don’t even have a basic will. But as the old adage goes, failing to plan is planning to fail.
Although it’s nice to think that you can trust your family or heirs to do the right thing, unfortunately if you don’t have your wishes formalized, there may be some dispute amongst your loved ones over what the right thing actually is. Even well-meaning and otherwise rational family members may wind up in a quarrel when faced with the stress and strain of your death or disability. Or there may be some member of the family who is in dire financial straits and tries to take advantage of an uncertain situation.
The best way to avoid family discord and disputes when you are gone is to prepare an estate plan with clear instructions on how your wishes are to be carried out.
Assuming Estate Plans Are Only Meant for the Wealthy or Those With Complicated Situations
Somehow many people hold the belief that estate planning is reserved only for rich people. But in reality it’s for anyone who wants to control what’s going to happen to their end-of-life medical care, assets, children, pets, or other private affairs if they become incapacitated or die.
In addition to dealing with what will happen to your money or property after you die, estate planning also includes tasks like setting up a living will, deciding on a guardian for any minor children, or pre-planning funeral or burial arrangements. If you’re not clearly stating your directives in these areas, you may be leaving a mess that will cause grief for your loved ones and result in decisions being made by the courts or the state.
Many people may assume that their financial or family situation is so straightforward that they don’t need to draft formal documents, like a last will and testament or a living will. The reality is that no one’s life is as simple as it seems. Putting protections in place to help ensure that your wishes are known will help your loved ones handle things when you are incapacitated or die.
And if you have young kids, you should decide who will take care of them and who will handle the finances should you pass away sooner than expected. These things are important whether or not you have substantial or complicated finances.
Procrastination – Putting Off Estate Planning for Too Long
According to the Rocket Lawyer poll, 57% of Americans say their excuse for not having a will is that they “just haven’t gotten around to making one.” We all tend to procrastinate on some things, but estate planning should really move to the top of the to-do list. At the very least, think of estate planning as a way to reduce familial stress when you’re no longer in a position to make decisions. Often it is the proverbial “pay me now, or pay me (much more) later” situation. If, for instance, you become disabled and don’t have powers of attorney in place appointing people to manage your financial affairs and health care decisions, your loved ones may need to engage in a court process to establish a guardian or conservator. Or if you don’t plan for the transfer of your assets your family may wind up paying far greater court costs and attorney fees to get matters properly handled.
Not Preparing for “What If” Scenarios
If things are going well, many people tend to carry on as if it will always be so. While it would be nice to believe that marriages last forever and that everyone stays healthy into old age, we all know that not every story has a happy ending. Unfortunate events have a habit of happening when you least expect it. No one wants to think about life changing events such as catastrophic accidents, businesses failing, serious health problems, or the like. But we all know these things happen. It is prudent to plan for such situations.
And as circumstances change, whether it be from divorce, health problems, or death, you should review your estate plan and adapt it to the situation. It is an ongoing process that should change as things in your life change.