There are a lot of things that can go wrong in an estate plan, particularly if you try to DIY. Here are some of the big ones:
- Not planning for incapacity. All of us will die, so having a will is important. However, many of us will also become incapacitated at some point in our lives, whether temporarily or permanently. Powers of attorney are critical to have in place so that you can choose who will manage things for you in the event that you can’t take care of yourself.
- Not thinking about long-term care. Related to my first point, many of us will end up needing long-term care in the future. Sometimes, insurance is an option; if not, then you need to think about saving for it now so that you have choices when you’re older.
- Not updating your estate planning documents. Wills don’t need to be updated all of the time, but you certainly should be looking at it regularly. Life changes; don’t keep that will that names your former brother-in-law after your divorce, or that keeps your children’s shares in trust until their 40 when they’ve become responsible adults.
- Choosing the wrong executor or attorney. This is one of the biggest issues in estate administration: an executor who doesn’t know what they’re doing, or actively takes wrong action. Don’t pick someone out of guilt or a feeling of obligation. Pick someone who will do the right job.
- Not keeping records. If your executor doesn’t know about your secret bank account, eventually, that money will go to the government. At best, it will languish, not being given to anyone. Be sure to have a list of what you own so that whoever needs to administer your estate can do so.
There can be a lot of moving parts in an estate plan, but planning well now will make everything easier for your executor and beneficiaries down the road.
