Common Estate Planning Mistakes

Despite the pandemic, two out of three American adults still do not have a will. Procrastination and thinking they don’t have enough assets to warrant a will are the top reasons given, according to the Huffington Post’s recent article entitled “The Biggest Mistakes People Make In Their Wills, According To Estate Lawyers.” Your last will and testament is one of the most important legal documents you’ll ever have. A will lets you state where you want your property, minor children and debts to go after you die, and it allows you to appoint an executor to carry out your wishes. The lack of a will is a common, tragic mistake. Everyone over the age of 18 needs some estate planning. The following are some of the biggest estate planning mistakes:

1. 1. Assigning co-personal representatives. You should name only one personal representative, with an alternate personal representative, rather than naming all of your children. If you have two executors and they don’t agree, who gets the final say? Selling a house is a good example: what if one child wants to keep it and two want to sell, or they can’t agree on a price? However, if you’re set on naming more than one, make it an odd number so it’s majority-rule, or have everyone sign a waiver agreeing in advance how disputes will be settled.

1. 1. Thinking a will is all you need to avoid probate. Probate is the legal process of administering a person’s estate whether they die with a will or without one (i.e., “intestate”). Although a valid will can say where assets are allocated, it will likely not avoid the probate process if there are assets titled solely in your name. If you have a will in place, but a bank account doesn’t have a beneficiary designation, the assets likely have to go through the probate process before being distributed according to the terms of your will. Talk with an estate planning attorney about how trusts work, how to title assets, and other strategies to minimize probate.

1. 1. Being too vague about items with sentimental value. When people pass away, relationships change. Money can change people. Children who got along so well when you were alive may not get along as well when you’re gone and not there to mediate between them. Simple language like leaving “an equal share” to your heirs makes conflict inevitable, since siblings who always got along may find themselves battling over items they never seemed to care about in the past. If you know that someone wants a specific item, like the family silver, write it down.

1. 1. Failing to update your will to reflect life changes. The biggest mistake people make when it comes to doing wills or estate plans is their failure to update those documents. Certain life events are obvious times to update a will, such as marriage, divorce, or the birth of a child or grandchild. However, even without one of these “trigger” events, it is recommended that your estate plan be revisited every three to five years. If you have children and grandchildren, for instance, and one of the children dies, the grandchildren will not inherit anything unless provisions are made in the will.

1. 1. Not thinking through whether an inheritance will help or harm. Leaving a large amount of wealth to a young adult can be destructive, even if it is legal. An outright gift to a college student could disqualify them from financial aid. A large gift to a family member contemplating divorce could end up in the bank account of the ex-spouse. Think carefully about the short and long-term impact of the inheritance.

1. 1. Keeping your will and estate planning documents a secret. Make sure people know where to find these documents and keep them in a safe place. If a will is not found, it is as if it does not exist.

1. Failing to hire an experienced estate planning attorney. It’s important to get your estate planning documents correct. If a will is found invalid by the court, it is as if you do not have one at all, and state law will determine what happens to your property. Even the best intentions from an attorney who practices in another area of the law puts your estate and your family at risk. The difference between a good set of documents and those drafted by a non-attorney (or one who doesn’t practice in this area of law) can mean considerably more time, money and stress for your heirs.

Reference: Huffington Post (March 8, 2022) “The Biggest Mistakes People Make in Their Wills, According to Estate Lawyers”