Skeptics like to say they don’t care what happens after they’re gone. However, when presented with the problems that happen without a will or estate plan—excessive costs, family estrangement, taxes—their hearts soften just enough to admit that they too need an estate plan.
A recent article from The Street, “3 Worst Estate Planning Mistakes and How to Avoid Them,” says that people don’t spend the time and effort necessary to the planning process. The result can lead to huge headaches, and sometimes, heartbreaks, for their loved ones.
Lack of Information. Unwinding the various pieces of your estate can be a monumental task. Some folks leave this all to chance. They fail to leave their executor and loved ones with a complete and updated list of where everything is located and how to get to it.
Think for a minute about all the assets you've accumulated in a lifetime: this will include your brokerage accounts, bank accounts, mutual fund holdings, IRAs, pensions and others. They’re hopefully all protected by a host of user names and passwords and maybe even by the answers to questions like the hospital of your birth and your first pet's name.
While things like insurance policies are likely online, some of your holdings are not available electronically. In addition, other possessions are totally digital, and you should guard against cyber-theft and hacking. Create a list of all your user names and passwords for investment accounts and other financial holdings.
Beneficiary Designations Issues. It’s not uncommon for people to forget that they’re required to name beneficiaries for their retirement accounts, annuity contracts and insurance policies. Messing this up is a guarantee that your assets will wind up in probate. It can be an expensive and time-consuming legal process, where your wishes may be disregarded.
Plans That Are Out of Date. If you were in your thirties when you last did an estate plan and you’re thinking about retirement in the next few years, your estate plan is dangerously out of date. If you’ve gotten a divorce, welcomed new members to the family or had a change in your asset level, up or down, your estate plan is not going to deliver the protection you want, or that your family needs. That’s not even including the changes that occur as the result of tax law changes. It’s time for a review at the very least, and it could be time for an overhaul, depending on how many years have passed since you updated your estate plan.
Reference: The Street (November 29, 2018) “3 Worst Estate Planning Mistakes and How to Avoid Them”