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Four Estate Planning Mistakes to Avoid

Setting up the transfer of your estate is too important to let mistakes happen. Prevent those with these tips.

It is common to overlook elements of an estate plan, and the consequences can mean your wishes aren’t carried out. Here are frequent estate planning fails and the easy fix for each.

1. Failing to plan. You need to make a thoughtful plan for your assets after your lifetime and prepare for the possibility of incapacity (see mistake No. 4). It is especially important if you have a large estate, minor and/or special needs children, real estate in multiple states or business interests.

The fix: Block your calendar and get an accountability partner. Make your estate plan a priority today.

2. Failing to coordinate beneficiary designations. Assets such as life insurance and retirement plans are not covered by your will and need to be addressed separately.

The fix: Designating a beneficiary for these accounts can often be completed by simply logging into your provider’s portal and naming a loved one or loved cause you’d like to receive the account.

3. Failing to review asset titles. Asset titling refers to the way in which you own an asset — such as in your individual name, jointly with someone else, or in a trust or entity. Assets titled to two people, for example, will automatically go to the surviving partner.

For example, your will could say that everything goes to the children equally, but if a bank account is held in joint tenancy with just one child, it would pass only to that child. The result is that the children receive unequal shares when the intention was to divide all assets equally.

The fix: Make a list of your valuable assets and review how they are held. If you need to make a change, make an appointment with your financial institution or attorney.

4. Failing to plan for disability or medical emergency. According to the Alzheimer’s Association, 6.2 million Americans 65 and older are living with Alzheimer’s disease. Older generations — as well as all competent adults — need to prepare for incapacity and create durable powers of attorney and advance directives or living wills.

The fix: Select a trusted loved one to serve as your durable power of attorney and document it in your will. Your advance directive/living will can be done through a form that is signed and notarized. Search for a form in the state where you live or contact your attorney.

Make the commitment
If you are among the majority of Americans who haven’t yet started the estate planning process (A 2021 Caring.com study says 68% fall in this category), now is the time. Your family members and heirs will be glad you did.

Editor’s note: This article is from the University of South Carolina.