Creating an estate plan is something that every person should do at some point during their lifetime. Since the future is unpredictable, it’s never too early to plan and determine how you wish to distribute your assets or who will receive specific gifts when you pass away.
An estate plan is a combination of documents (including a Last Will and Testament and Power of Attorney, among others) that specify how you want your assets (including money) handled when you pass away, so it’s important to make sure these documents are completed correctly and updated when needed.
Although most people create their estate planning documents with care and attention, people make some common mistakes. This post goes through some of the most common mistakes so you can take the necessary steps to correct them in your own estate plan — or better yet, avoid them entirely.
Read More: Estate Planning Checklist
Misspelling beneficiary names
People often misspell their beneficiary’s name in documents like Last Wills. It might seem like a small, inconsequential error, but a misspelled name could potentially cause unnecessary stress and grief for your beneficiary.
For example, let’s say one of your beneficiaries got married at some point after you created your Last Will, and now their legal name is different from what you have in your document.
Although the beneficiary could still receive their intended inheritance, it complicates the executor’s role.
In addition, depending on your jurisdiction, some insurance companies may require additional documentation from family members, such as an Affidavit, to prove the beneficiary’s identity.
If you need to change a misspelled name in a Will, use a Codicil. This document allows you to make minor changes to a Will without rewriting the entire document.
Failing to update your estate plan after a major life event
An estate plan is a collection of living documents, meaning you can modify the documents as you need. You should revisit your estate plan if you’ve recently experienced a major life event such as getting married, divorced, or having or adopting a child. If you don’t, your executor may carry out your estate plans without making allowances for circumstances that may have changed.
For instance, if you got divorced but neglected to remove your ex-spouse’s name from your estate planning documents, there is a possibility that they would still receive assets or property from your estate even though you didn’t intend for that to happen.
Forgetting to talk to your executor or attorney-in-fact in advance
Being an executor in a Last Will or an agent in a Power of Attorney is a big responsibility that often requires a significant commitment from the person appointed.
Sometimes people will assume that close family members or even friends are up for the task when they are not, so it’s important not only to ask the person you want to be your executor or attorney-in-fact but also have a serious discussion with them regarding their responsibilities should they accept the role.
If an executor or agent is unwilling or unable to act on their role, the final decision of who should serve as your executor or agent may fall to the court.
Avoiding mistakes in your estate plan
When someone passes away, executing estate planning documents can be a lengthy process, so adding unnecessary confusion with avoidable errors only makes the execution process longer and more complex.
It’s important to review your estate planning documents every time you make changes to ensure accuracy so that your estate plan fulfills your wishes.