Estate planning is an essential step to take to make sure that your loved ones are cared for if anything happens to you.
However, there are a few common mistakes that can cause complications. In the worst case, they can cause disputes among your beneficiaries.
Here are the most common pitfalls of estate planning — and how to avoid them.
Forgetting About Digital Assets
To begin with, one aspect that many people tend to forget about are digital assets.
In today’s virtual world, digital estate planning has almost become a science in itself.
At the very least, you need to include a section in your estate plan on how you want your digital accounts handled after you pass away. This includes social media accounts, email accounts, online banking, and cryptocurrencies.
You also need to make sure that your executor has access to all the relevant accounts and can overcome hurdles such as two-factor authentication and security questions.
Not Communicating With Your Beneficiaries
Breaching the topic of estate planning with your friends and family is not easy, but it’s important.
It’s best to have a brief conversation with your beneficiaries in order to set expectations. This way, you can handle potential disputes yourself instead of leaving conflict to flare up after you’re gone.
If talking to people you wish to consciously leave out of your will is not an option, you can include certain phrasings to make sure that they are written out without the possibility to contest. The best course of action to make sure that this is water-tight is to consult an estate planning attorney.
Neglecting Updates to Your Plan
Many people draw up an estate plan once and then put it out of their minds. However, it is important to regularly update your plan.
Major life events such as divorces, marriages, the birth of a child, or the death of a beneficiary all bring about changes in your estate planning.
However, even if no major changes occur, it is a good idea to schedule a general review of your plan every three to five years.
Not Specifying Power of Attorney and Healthcare Provisions
Another aspect of estate planning that many people neglect is naming a power of attorney, either in the financial or medical sense, or specifying a healthcare proxy.
If you become incapacitated, these roles are crucial. Normally, they dissolve once you pass on.
If you don’t include specifications for these roles in your will, draw up standalone documents that designate someone you trust to make medical and financial decisions for you.
Failing to Secure Your Estate Plan
Finally, another common estate planning mistake is failing to keep your plan secure. Even the best plan will be useless if it can’t be found.
Make sure to store it in a secure location, such as a fireproof safe, and inform trusted family members about its location.
Having an estate plan is crucial to preparing for the eventuality of your passing. By avoiding the mistakes above, you’ll be able to ensure that your loved ones are cared for.