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 ahead and determine things like how your assets will be distributed, or who will receive specific gifts when you pass away.
An estate plan is a combination of documents that specify how you want your assets (including money) to be 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, there are some common mistakes that people tend to make. This post goes through some of the most common issues people have so you can avoid them or take the necessary steps to correct them in your own estate plan.
Misspelled Beneficiary Names
A common mistake with estate planning is misspelling beneficiary names in documents like a Last Will and Testament. 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 listed in your document.
Although it’s possible that the beneficiary could still receive what they were intended to, it adds a layer of complexity to executing the Last Will that would not have been there if the name had been correctly changed in the first place.
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.
Not Updating Your Estate Plan After a Major Life Event
An estate plan is comprised of living documents, which means they can be modified as needed. You should revisit your estate plan is 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 estate plans may be executed as-is without making allowances for circumstances that ma have changed.
For instance, if you got divorced but neglected to remove your now ex-spouse’s name from your estate planning documents, there is a possibility that they would still receive assets and/or property from your estate even though you didn’t want them to.
Not Talking 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 level of commitment from whoever is 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 to not only ask the person you want to be your executor or attorney-in-fact, but 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 act as your executor or agent may fall to the court and the outcome may not be what you intended.
Avoiding Mistakes in Your Estate Plan
Executing estate planning documents when someone passes away can already 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 can be executed as smoothly as possible when the time comes.