Getting an estate plan together is no easy feat. If you already have one in place, give yourself some credit. You are part of a small percentage of Americans that can claim to have their affairs in order. This is true even after living through a global pandemic — a plague that led many to question their own mortality and start thinking about putting together an estate plan.
How many people actually have an estate plan?
Approximately 33% of Americans currently have an estate plan. Most point to a lack of time as the primary hurdle to getting a plan, while others voice concern about having enough assets to justify the process.
What should I include in my estate plan?
The exact legal tools to include in an estate plan vary depending on the estate and your goals. Some examples can include:
- Will. Arguably the most commonly known estate planning tool, a will is a document that spells out who gets what.
- Trust. This legal tool can hold assets and provide distributions in smaller sums. This is an important legal tool for those who have accumulated a higher level of wealth and can serve to help with tax savings and protections from creditors.
- Power of attorney. You can tailor these documents to help guide medical care and financial decisions in the event of an incapacitating illness or injury.
- Guardianships. Often associated with younger children, a guardianship can help ensure children are in good hands if we are not able to raise them into adulthood.
Estate plans often include a mix of these tools to help meet your goals.
What mistakes do I need to avoid?
A mistake in an estate plan can cause more than just frustration and an unintentional beneficiary, it can be incredibly costly. This is because in addition to the loss of the asset at issue the estate itself can go through costly litigation. Three of the most common mistakes to avoid include:
- Lack of communication. Legal disputes are often rooted in miscommunication. One heir may truly believe they knew your intent and that the estate plan is not an accurate reflection. This could fuel a lawsuit in a misguided attempt to fulfil your wishes.
- Poorly drafted documents. It is possible to update estate plans and redraft a will — but do so with care. The recent estate battle to determine which of Aretha Franklin’s wills was valid is one of many examples of the need to meet legal requirements for a valid will and have it in an easily accessible location.
- Failure to keep up with beneficiary designations. It is important to make sure you update accounts that require beneficiary designations, like bank accounts, investments, and insurance policies. A wrong or missing designation can mean the asset gets caught up in probate or another court battle.
Unfortunately, even when we follow the rules disputes can occur. Those who find themselves navigating an estate dispute are wise to reach out to legal counsel experienced in this area of the law to help better ensure their interests are protected throughout the process.