I'm astounded by how often I see the same estate planning mistakes being made over and over again by highly intelligent women. We wear many different hats in our lives, including wife, mom, business owner, daughter, leader, etc. yet so many of us goof up even the basic tenets of our estate planning, leaving a mess for our families to try to sort out later. Here are a few I outlined in a recent workshop hosted by Sandi Guice of MetLife Financial:
1. They Have No Written Plan.
Everyone has an estate plan, whether you know it (or like it) or not. There are default rules in place for those who don’t take the time to make their own written estate plan.
Without a written plan of your choosing, your kids and family are at the mercy of the government and the courts about such critical decisions as:
- Who will raise your kids
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Who will inherit your money/property and when they will inherit
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Who will manage your money/property
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Who will make medical decisions for you if you’re incapacitated
2. They Have an Out of Date Plan.
Estate plans should be reviewed and if necessary, updated, with every major life event. We all know what MAJOR LIFE EVENTS are when they happen to us (i.e. marriage, divorce, birth, death, disability, out of state move, inheritance, etc.). Even if you don't think anything major has happened in your life, I recommend a review of your plan every 3 years. If nothing else, the law may very well have changed in that time thereby affecting your plan!
Although your plan should be flexible to accommodate different scenarios, your plan needs to be updated over time as your circumstances change.
3. They think a Will or Trust is Enough.
What many people (even some attorneys) forget is that a person's estate plan is more like a puzzle with the estate planning documents being just one piece of that puzzle. Sure, the documents are important (remember rule number 1 above?) but there are other considerations such as who your family members are, Federal and State law, the types of property your own, the titling of your accounts and assets, the beneficiary designations on your accounts and policies, etc. My job as your estate planning advisor is to help make sure that all of the pieces of your estate planning puzzle fit together in such a way to provide for you during your life and your heirs (or other beneficiaries) after your death.
4. They Do It Themselves.
Litigation attorneys love it when people try to 'do it themselves' because it makes them a lot of money when they mess it up! Again, most people don't realize that taking matters into their own hands can sometimes have costly ramifications for their family. Real life example: I represent an estate in which the mom added one child onto all of her accounts for convenience purposes with the 'understanding' that her child would split the accounts equally with her siblings after mom died. Guess what? That child isn't sharing! Unfortunately, with a little planning with a qualified estate planning attorney, mom could've accomplished her wishes and divided her estate equally among all of her children with minimal cost.
5. They Haven't Named a Guardian for their Minor Kids.
If you don’t nominate guardian(s) to raise your minor kids if something happens to you and/or your spouse, then a judge who doesn't know you or your family dynamics will make this critical decision for your family.
Things to watch out for:
- Not naming enough alternates
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Not being specific on who you want to serve and under what circumstances
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Naming the caretaker guardian as the financial guardian also
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Not specifically excluding those you know you wouldn’t want to serve as guardian.
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Not naming immediate short-term emergency guardians
I've written a Minor's Guardianship Guide which you can download right now from my website for free.
