The Number One Estate Planning Mistake

Google the phrase “Estate Planning Mistakes” and you’ll see pages of results. Seems like attorneys and financial planners are always telling their clients how to avoid one mistake or another as they put together their estate plan. But in the end, the single biggest mistake you can make is all about what you DON’T do.

From our perspective, the number one estate planning mistake people make (after not doing it at all) is not finishing it.

According to the Caring.com 2021 Wills and Estate Planning Survey, 2 out of 3 American adults do not have an estate plan. But what those numbers don’t show is how many people start, but don’t FINISH, their estate planning, effectively leaving them without a plan even though they think they have done it.

What does that mean?

Drawing up papers is just one part of the process. And is likely what the respondents to the Caring.com survey were thinking about when they responded.  But once you’ve worked with an attorney to discuss your goals, plan your strategies, and complete paperwork, you’re almost certainly not finished.

Funding Your Trust

Many estate plans include a revocable trust, also known as a living trust.  This can both help avoid probate and can be part of your disability planning strategy. The problem is that many estate owners skip the next step: Funding the trust. Basically, this means transferring your assets to the trust.

To protect your home or other real estate in the trust, you must change the deed to reflect that the trust is now the owner.  You’ll likely need to change or open new financial accounts to change the name of record.

Taking care of funding your trust is neither difficult, nor expensive, but neglecting to do it is very common.  And the results can totally derail your plans.  Without putting your assets into the trust, you won’t avoid probate, and any other benefits you planned when establishing the trust could be in jeopardy.

So, avoid this most common of estate planning mistakes and make sure you fund that trust. Your estate planner can and should work with you to review all the steps necessary to get it done.

 Review Your Beneficiaries

Certain assets, like insurance policies, retirement accounts, annuities, etc. have their own beneficiary forms that might contain information that is different from what you put into your will.

Want to avoid another of the most common estate planning mistakes? Be sure to update your beneficiary designations once your estate plan is done. This will ensure the asset goes where you’d like for it to go.

For example, maybe you put your parents or siblings on your retirement account when you opened it, before you met your spouse or partner.  If you’re expecting the asset to go to him or her upon your death, make sure you’ve updated the beneficiary on the account. In fact, it’s a good idea to review your beneficiary information every few years and after any major life change.

Similarly, it makes sense to review asset ownership to ensure it lines up with your plans (see Funding Your Trust above!) You may own some assets in your own name, and others jointly with a spouse, parent, or child.  Other assets might be in a trust of limited partnership.

During the estate planning process, you should review these to ensure that they still meet your needs.  And once the planning is done, you must make any changes necessary in a timely fashion. If not, you run the risk of never making the necessary changes and running into problems later on.

Start Today

 If you haven’t yet started your estate plan, what are you waiting for?  It is probably less daunting than you think – especially if our Wills in a Week group bootcamp is a good fit for you.

Once you’ve got your plan settled and your documents drafted, make sure your estate planner has given you all the details you need to update documents, beneficiaries, and ownership of assets.  Then it is on you to get it all done. If not, your investment in an estate plan could be wasted.  In our experience, it is best to take care of those follow-up items as soon as possible – otherwise they just might not get done.

Our attorneys at Ladimer Law can help you put a plan together, execute it, and ensure you’ve got a plan of action to finish the process.  Contact us today at (508) 532-8689 to learn more and get started.