Before we look at those mistakes to avoid, let’s go over what estate planning is designed to accomplish. Essentially, an estate plan allows you to pass on your assets in the way you desire. It can also specify other actions, such as naming someone to care for your minor children if you were no longer around. In creating an estate plan, several key documents are involved, including a will, a trust, a financial power of attorney, and a medical power of attorney or a health care directive.
For more information about the key documents that should be included in your estate plan, be sure to visit our blog post: https://www.perpetualcare.org/post/key-estate-planning-documents
Here are 5 common estate planning mistakes:
1. Not including your pets in your plans
Only 60% of people have a will but only 7% of those people have included their pets in their will. Yes, we love our pets like family, but the law considers pets to be property and therefore they are an asset that needs to be included and designated to go to someone in your estate plans.
Remember that if you have a simple will for your estate plan, your will only takes affect when you pass away. What if you become ill, disabled or have to go into a nursing care facility? So much can happen before you pass away, it is important to protect your pet. You can choose to set up a trust to cover such circumstances, but if you don’t want to pay for a trust, we have a simple pet life care agreement template that you can use to cover your pet in those circumstances. For a copy of our template visit our website at: https://www.perpetualcare.org/estate-planning
2. Not keeping your documents in an easy to find location
If something happens to you and you are not able to communicate to family members or friends, will they know how to find your estate plan documents? So, how can you make it easier for them to find your documents? Perpetual Care provides anyone a free File of Life Packet for their home. In the packet there is a place to identify who has your healthcare proxy and where your estate plans are located. If your documents are with your attorney, you can list their contact information or you can note the place in the home. My attorney also documents in his files where my files are located in my home, so ask your Attorney to document it for you. To request our free File of Life Packets visit our website at: https://www.perpetualcare.org/services
3. Not communicating your plans
You’ll need to inform your family about whom you’ve chosen as executor, the individual who will administer your estate, and whom you’ve named as the trustee, the person who will manage your trust’s assets. (You can also choose a trust company to handle this duty.) And to help avoid unpleasant surprises when your estate is being settled, consider letting your children or other close relatives know who will be receiving what.
At a minimum, it's important to communicate that you have a will or other estate plan documents. If you have pets, it's important to ask the people you want to care for them if something should happen to you and then inform other family or close friends who are your designated caregivers. We have a nice certificate you can even use to share that information and put it into a picture frame for them. To get our certificate template visit our website at: https://www.perpetualcare.org/services
4. Not reviewing your plans periodically
Once you create your estate plans, don’t forget about them. Over time, your personal situation may change. You may experience a remarriage or bring in new children. Your interests may change, too. Perhaps you’ll become deeply involved in supporting a favorite charitable organization. Given these and other potential changes, you’ll want to review your estate plans once in a while to see if they need to be modified. We recommend that your review them annually and whenever significant life events occur. For example, if you designate a primary and secondary caregiver for your pets, and one of your caregivers moves away, you may choose to change your designated caregivers.
5. Not updating beneficiary designations
Every so often, you may want to review the beneficiary designations on your life insurance policies, investment accounts and retirement assets. Changes in your life, such as remarriage and the addition of new children, may also affect your beneficiaries. Beneficiary designations are powerful and can even supersede your will, so you’ll want to update them as needed.
Most importantly, the best way to avoid mistakes is to work with your attorney, ask questions and every year perform a review of your documents. If you want to avoid the cost of attorney's fees, just look over your copy of the documents at home. It may take 15 minutes that could mean so much to you, your family and your pets.