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Avoid common estate planning missteps

On Behalf of | Sep 22, 2020 | Estate Planning

It may be surprising to know that only 40% of American adults have an estate plan in place, according to online consumer website caring.com. The group says the number of older and middle-aged adults with a will or other type of estate planning document has dropped by nearly one-fourth since 2017.

But, even those with an estate plan may not achieve their goals due to avoidable mistakes. Financial experts say most of those failures are caused by human error, resulting in financial losses or increased risks to family harmony.

Main reasons estate plans fail

One reason estate plans fail is because the participant doesn’t follow through. An estate plan needs to be implemented and regularly updated. The biggest errors include:

  • Not funding a living trust: Trusts help you avoid probate and manage assets during a disability. However, if property, such as a family home, other real estate, automobiles, etc. aren’t transferred, these assets must go through probate unless these assets meet the criteria as a small estate under California Probate Law.
  • Failure to communicate: Healthcare directives and powers of attorney are vital estate planning documents, but many people walk away from their attorney’s office and never mention them to the successor trustees, and agents for healthcare directives and power of attorneys. Family members and others you’ve chosen to act on your behalf need to know these documents exist.

In addition, estate plans can fail if they aren’t updated to reflect significant changes to your life, such as births, deaths, marriages, divorces or other major events.

Steps to ensure estate planning success

In addition to working with an experienced estate planning attorney, there are several steps you can take to reach your goals, such as:

  • Informing heirs: While you don’t need to share every detail, offer your beneficiaries a general outline of your plan, such as the value including assets and liabilities. That will keep them from being surprised and let them share their opinions.
  • Preparing heirs: If your beneficiaries stand to inherit a substantial amount, explain your intentions and wishes to help ensure they successfully manage their share. This also gives them time to sharpen their financial literacy skills, if necessary.
  • Following through: You should leave your attorney’s office with a checklist of actions to take so your planning achieves the best possible results, including minimizing family dissension.
  • Reviewing and revising: Meet with your estate planning lawyer whenever significant changes happen, or at least every couple of years.

Prepare for a smooth transition

Lawsuits and family discord often result when heirs are surprised over estate plans. While you don’t have to share all the specifics with everyone who stands to benefit, you can avoid many of these disruptions by keeping those closest to you apprised of your wishes.