Whoops! Don’t make these common mistakes when planning ahead

By Jada Gaines CONTRIBUTOR

Some of the most common mistakes made in estate planning can be easily avoided. The reason why many make these mistakes is because they didn’t know what to look for.

In estate planning, the old saying holds true that “When you know better, you do better.” Knowing what common mistakes to avoid when creating (or updating) is just as important as the estate plan itself. Here are a few things to look out for:

Failure to plan. It’s no surprise that the most common mistake one can make in estate planning is not taking the time to craft one. Estate planning is one of the most procrastinated topics. Not dedicating a small percentage of your time to prioritize creating a comprehensive and complete estate plan puts your estate, your legacy, and loved ones at a viable risk.

Contingent beneficiary. Death beneficiary designations come with both pros and cons. Many use beneficiary designations as a means to avoid a specific asset being subject to the probate process, but fail to plan for the possibility of their primary beneficiaries predeceasing them. Have you accounted for a contingent beneficiary?

Lifetime planning. Some of the most underappreciated documents are powers of attorney. Ideally, a durable financial power of attorney and a health care power of attorney should be part of any well-crafted estate plan. Many fail to appreciate the value of these documents, leaving their loved ones with the troubles of having to seek guardianship or conservatorship over them.

Digital assets. In the wonderful new world of technology that we live in, how can we forget to plan for our digital assets? Digital assets are not just things such as “cryptocurrency” or online banking. What about email accounts, social media pages, business websites, etc.? If your estate plan doesn’t lay the foundation for how your digital assets are to be handled and managed, then your plan will be in for a bumpy ride.

Failing to update. Your estate plan should remain current and be a reflection of your life changes. Whenever a major life event occurs (death, divorce, birth, relationship change, etc.), your estate plan may require an update or two. Likewise, even if you have not encountered any life-changing event, you should still review your estate plan oncer every three to five years to make sure your plan still suits your wishes.

Empty trust. Having a trust as part of your estate plan can be a beautiful thing – unless its unfunded. In order to have certain assets properly become part of a trust, those assets need to be retitled. This is part of what we call the “trust funding process.” An unfunded trust is a useless trust – and a waste of money!

Final arrangements. Have you ever watched a movie where there was a drama scene surrounding funeral arrangements and/or who was to be in control of the disposition of someone’s body? Well, it’s not only in the movies – it happens in real life. When you pass away, your family will already be grieving your death. One of the last gifts you can leave your family is information or instructions on how you’d like to be celebrated.

Speak with an estate planning attorney to avoid having your estate plan fall victim to some of these most common pitfalls.