When thinking about your estate plan it is important to create one that avoids common pitfalls and mistakes. After all you go through with your time and investment, you want to create a plan that will work and protect your loved ones in the event of your incapacity or death. Making sure you are aware of common estate planning mistakes means that you’ll be likely to avoid them. So what are these common mistakes? Here are the top 5 common estate planning pitfalls that we see most often.
- Falling to plan. The reason most people do not plan is procrastination. Whether we think we are too busy or the cost is too expensive, the price of not planning is clear when the unexpected happens and our loved ones find themselves in either guardianship court or probate court to manage or distribute our assets without our prior input. Simply put, none of us have a crystal ball so doing our best to plan for the unexpected is the best we can do for our family and loved ones now.
- Not discussing with family and friends. It is absolutely critical that you share with your executor, agent and trustee that you have a signed estate plan and where they can find the original documents. You want your fiduciary to know that your documents exist so they can use them when the unexpected happens. We always encourage you to share your Health Care Power of Attorney document, HIPAA release form and Living Will with your agents so they have a copy available to them when it’s needed. Whether you share more details about your estate plan is ultimately up to you, but we recommend sharing the fact that you have a plan and where to find it at a minimum.
- Forgetting about Power of Attorney. When we are thinking about a Power of Attorney, we are generally thinking about a Property or Financial Power of Attorney and a Health Care Power of Attorney. Both are extremely important as they allow your agent to step into your shoes during your lifetime during times of incapacity. If something unexpected happens and your family needs to speak to your bank to handle your monthly bills, they will need either a valid Property Power of Attorney or a court order appointing you as a guardian. The guardianship process is long, costly and public. The Power of Attorney avoids the need for a guardianship petition.
- Not naming back-ups. Throughout your estate plan, it is important to plan for the contingencies. This means that if you name Person A to be your trustee, you should think about who you would want to act if Person A is unwilling or unable to act on your behalf. It is important to have a back-up so someone is available to act on your behalf in the event that they are incapacitated or have passed away. We always recommend having at least one back-up, but it may make sense to list more in certain situations.
- Not keeping the plan updated. Keeping your plan updated is critical to make sure your loves ones can step in and seamlessly assist in the event of your incapacity or death. Just like any investment, you want to review the terms periodically and make changes as needed when your life circumstances change or if there has been changes in the law. We recommend that you review your plan at least every 3-5 years or sooner if there have been major changes to your life, finances or health.
Reach out to us today to get started on creating your estate plan at Sinclair Prosser Gasior. Call us at (410) 573-4818 to schedule an appointment.