The presence of a comprehensive estate plan or the absence of one can make the difference between lessening the burden on loved ones or adding additional grief for them down the road.
The lack of an estate plan or a poorly-planned estate plan could mean that taxes and fees eat deeply into the estate, probate drags on, and the wrong people inherit.
Here are common traps that we've seen individuals run into:
#1. Thinking they don't need a will, trust, or other estate planning documents.
#2. Putting off estate planning because they are not ready to make the necessary decisions.
#3. Delaying estate planning because they and a spouse or partner do not agree.
#4. Delaying estate planning until it's too late.
#5. Relying on a handwritten will or letter.
#6. Attempting to dispose of property that is not part of the estate.
#7. Not executing the estate planning documents with the legally required formalities.
#8. Attempting to self-amend the estate planning documents.
#9. Naming the estate as a beneficiary of the retirement accounts.
#10. Naming the estate as a beneficiary of the life insurance.
#11. Failing to coordinate the beneficiary designations with the will and living trust.
#12. Naming a minor as an outright beneficiary of a will, trust, life insurance policy, or retirement account.
#13. Disbursing funds from trusts to immature young adult beneficiaries.
#14. Leaving an inheritance directly to a special needs individual.
#15. Not having a living will and medical power of attorney.
#16. Not having a financial power of attorney.
#17. Not doing any planning to reduce estate taxes.
#18. Not planning for how to pay estate taxes.
#19. Not maximizing annual tax-free gifts.
#20. Owning a life insurance policy.
#21. Not revising the estate plan after significant life changes.
#22. Forgetting to update beneficiary designations on life insurance and retirement accounts.
#23. Leaving a living trust unfunded.
#24. Failing to destroy prior estate planning documents.
#25. Not addressing digital assets.
#26. Failing to name alternates.
#27. Not telling anyone where estate planning documents are stored.
#28. Not planning for burial or cremation logistics.
#29. Choosing the wrong person to act as executor, trustee, or agent.