Yes, mistakes happen. It would be unfair to expect every Estate Plan to be perfect. There are always unforeseen circumstances, and things that are beyond everyone’s control.
That said, there are a handful of super common mistakes that I see over and over again. They happen so frequently, I hesitate to call them mistakes. Some are assumptions that are incorrect. Some are lapses in knowledge, because we weren’t all raised by attorneys to be attorneys. Regardless, these mis-steps can be foreseen and are within our control. These are entirely avoidable mistakes.
Which is why I’m bringing them to your attention.
1. Assuming You Don’t Need an Estate Plan
“How can I need an Estate Plan when I don’t have an estate?!?!”
Okay, you already know “estate” doesn’t mean a moat, rose garden and stables. But too many people STILL assume they only need an estate plan if and when they have a certain level of wealth, own a house, have kids, etc. Truly though, Estate Planning is about availing yourself of basic legal protections we’re all entitled to.
The day you turned age 18 and became a legal adult, all your personal decisions became yours and yours alone. No one else may legally step in and help if the need arises: not your parents, not your spouse. It’s up to you to decide who should make decisions for you if there’s ever a time you can’t make them for yourself. And those decisions must be legally documented in a way that they can be relied upon when needed.
You work hard to make sure you use each and every tax deduction you’re entitled to, max out your paid time off from work, utilize health insurance benefits and get necessary repairs done while your appliance or car is still under warranty. Why wouldn’t you also avail yourself of these basic legal protections???
2. Thinking Legal Documents Alone are an Estate Plan
Legal documents are an important part of your Estate Plan, but they are just that: documents. They are not in and of themselves an Estate Plan.
You need three things if you want your Estate Plan to be successful:
- The legal documents;
- Assets aligned with the Plan; and
- Key people looped in to what the Plan provides.
While the legal documents outline what you want to happen when you die or you become disabled, there’s more than just that to an Estate Plan. You also need to make sure all your asset ownership and beneficiary designations line up with what you’ve said you want. The Plan itself won’t override a beneficiary you listed for a specific account, asset, equity or….something else.
It’s super important to make sure the people who figure prominently in your Plan are aware of your Plan objectives too, so others don’t come forward and start legal proceedings to take over, mistakes get made, or worse yet, assets get lost!
If you’re missing any one of these three things, your Plan might not work when your family needs it most.
3. Failing to Finalize Asset Integration
I see this time and time again. A family comes to me, still grieving the loss of a loved one, slides a pile of papers across the desk and says, “here are his estate planning documents. What do we do now?”
The legal documents include all the usual: Trust, Will, etc. But as we dig into the asset information we start to see that no one coached the family on how to make sure asset titling and beneficiary designations were brought into alignment with the Estate Plan. Now there are all kinds of contradictory directives out there, eg. a Trust names a daughter as the heir, while a specific asset still has a college roommate named as the beneficiary. Or retitling and updating never took place, and while the trust exists, there’s officially nothing in it. I wrote about this awhile back in The Terrible Surprise of an Empty Trust.
This results in the family having to deal with the Probate Court, assets ending up going to unwanted places, and all kinds of unnecessary taxes being paid.
Such. A. Phenomenal. Mess.
Any Estate Planning Attorney worth his or her fee will coach you on how to make sure your assets are integrated into your Plan so you achieve the sought-after outcome. This might mean retitling things into a trust, double-checking named beneficiaries on life insurance or retirement accounts, or simply adding a pay-on-death beneficiary to bank accounts.
No matter what kind of asset integration is needed, your Estate Planning Attorney should be including that as part of the planning process. You shouldn’t be expected to know this on your own. This is why you’re hiring an expert in the first place!
4. Not Telling Fiduciaries They’re Named in Your Plan
“I’m not sure I want to tell people I’ve named them in my Plan.” Maybe you don’t want to hurt the feelings of people you didn’t name. Or you have a sense of privacy about these things. Perhaps a conversation about this feels uncomfortable. Here’s the problem though: if the people you’ve named in your Plan don’t know they’ve been named, then they won’t know to step up to help when the time comes.
Think about it: if Suzy hears you’ve been in a car accident but doesn’t know she’s your Health Care Agent, everyone is just going to be scratching their heads about who should make medical decisions for you. There’s no automatic right for any particular family member or person to be able to do that. Someone is going to be scrambling to deal with the Probate Court to be given the legal authority to help.
If, however, Suzy knows she’s your named Health Care Agent, then she’s going to know that she’s supposed to be helping you. She’s also going to know where to find your Health Care Proxy so that she can share it with your doctors and the hospital. This is the outcome you want. We can figure out ways to address any hurt feelings, privacy concerns and difficult conversations.
5. Failing to Review Your Plan Regularly and Update as Needed
An Estate Plan is not ‘one and done’. You never really check it off your to-do list forever. When done correctly it’s ‘the right Plan for right now.’ And then it has to be monitored to make sure any one of a number of life circumstances doesn’t throw it off kilter.
Most people know to review and update their Plan when people die or drift away; but even knowing that doesn’t keep it top of mind. There are a whole host of innocuous everyday happenings though that can call for a Plan Review and possible update.
Laws Change. People Come and Go.
Are you still close with the people who were important to you in college? When you got married? The time you made that big job change? When you started thinking about retiring?
For a longer list of all the different phases of life that might necessitate updating your Estate Plan, check out Estate Planning Stages Everyone Goes Through.
Asset changes also need to be integrated into your Plan. Heck, I do this for a living and still spaced-out when I opened a new online bank account in my own individual name instead of titling it to my trust! Luckily, a friend pointed it out to me a few days later. I’m not sure it would have dawned on me otherwise!
It’s just that kind of conversation that’s needed to prompt you to make necessary changes. And too often that prompt never comes. I know this, because I’ve worked with families where the conversation never happened and now there are assets all over the place… including on the Unclaimed Property Fund List.
Having some kind of Preservation Plan in place that regularly monitors or that builds in cues to update your Estate Plan is the best way to insure your Plan will work when your family needs it most.
6. Working With An Attorney Who Has No System
Finding the motivation and inspiration to get started on an Estate Plan is hard. Really hard. Perhaps you’re stuck because you think you have to have everything figured out before meeting your attorney. Maybe you’re not sure which attorney to contact and it can be hard to ask friends or family for a suggestion. It could be that you have a complicated family situation, and you’re not looking forward to explaining that to a stranger (#todaysmodernfamilies!).
I get it.
That’s why it’s so important that when you do get into motion, you work with an attorney who has a system to keep things in motion. There’s nothing worse than having an attorney tell you, “get back in touch after you’ve….”
No. Absolutely not. Hard stop.
That’s a sure-fire way to have things come to a dead halt until you muster up that same level of motivation and inspiration all over again. It was hard enough the first time around, you shouldn’t have to do it again. Ugh.
Your Estate Planning Attorney will hopefully understand this and have a system in place so that there are clear next steps and accountability on both sides of the collaboration. And those steps should include provisions to address each of the ‘mistakes’ mentioned above. The whole point of hiring a professional is to make sure the job gets done AND that it gets done right. You don’t want you or your family being the example of what not to do.
Avoiding Mistakes 1 through 6
You might (or might not) be surprised to hear that it’s possible to make ALL SIX of these mistakes at the same time. It sounds something like,
“Oh, I don’t need an Estate Plan. I just need a Will and that other legal stuff, and once I get those papers signed, I’ll be able to check this off my to-do list for good! I’ve been meaning to get it done, and I know I’ll get around to it eventually. There are more important things I need to deal with right now.”
We would LOVE to help you avoid all six (or any one of these six) mistakes, mis-steps and mis-understandings. Wherever you are in your Estate Planning Journey, from “I’ve done nothing” to “Time for an update” to “Oh no, here we are,” we’re ready for you.
Remember: you’re entitled to engage an attorney you feel comfortable talking with openly and honestly about all facets of life. We’re all about #todaysmodernfamilies. Let’s start a conversation.