6 Estate Planning Mistakes to Fix Now

/ Planning Within Reach/

Estate Planning is something we all need to do regardless of net worth or personal situation. Your loved ones bear the burden of your mistakes - whether that is high probate fees, delays in receiving their inheritance, or hurt feelings that can destroy relationships. Here are the most common mistakes and how to avoid them.

Common Estate Planning Mistakes

1. Not having a plan in place.

Many people assume they do not need a plan. If you have a house, a child, money in a brokerage account over a certain amount (state specific), or you desire to have specific items go to particular people, you are in need of a plan. Regardless of your situation, everyone should have at least:

  • A Will,

  • an Advanced Health Care Directive, and

  • a Durable Power of Attorney.

2. Not thinking through the Guardian for your minors.

Besides the obvious requirements of loving your child and being someone you want to raise them, the potential Guardian should have the necessary financial means, a stable life, and a relatively high probability they will be around to raise your child. The first thought for many is to name a parent, but this may not be the best idea.

3. Not explaining your plan to those involved.

Notify the people named in your estate planning documents of their roles. Provide them with a copy of your documents if you feel that is appropriate. Have the discussion now so they can ask questions and make sure they are comfortable with what may be asked of them. Not everyone is flattered by being named a Successor Trustee, for example. Sometimes it can be seen as a burden and something they are not up for. It is best to be clear on that now so you can make alternate arrangements.

4. Not titling assets in the name of your Trust.

Your Trust is powerless if you don’t title the assets properly. In general, assets without a beneficiary designation option should be titled in the name of the Trust where possible, but check with your estate planning attorney and they will tell you exactly what needs to be done.

5. Not keeping your beneficiaries up to date.

The most common mistake! You are not required to name a beneficiary when you open an account, so many people leave this blank and assume they will get back to it. At least a few times a year I have a new client that has zero named beneficiaries or still has their ex-spouse or partner listed. Sometimes the listed beneficiary has even died. We are all busy - it is understandable. That is why it is best practice to make a note for yourself to review beneficiaries periodically, such as once a year.

6. Not updating your plan with law changes.

Laws change. Unless you are an estate planning attorney, it is unlikely that you will be able to keep up with the new information (or that you will fully understand how changes relate to your plan). It is best to have an estate planning attorney review your document periodically, such as every 5 years, to see if there are any updates necessary.

originally published 8/30/2018

Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.

Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.