Learning from your parents’ estate planning mistakes
Creating an estate plan can provide you with the peace of mind that comes with the knowledge that your assets, your interests, and, most importantly, your loved ones will be protected after your death.
Unfortunately, estate planning mistakes due to improper planning, omissions, or miscalculations, can compromise your original intent and significantly lessen the financial legacy you leave behind for your beneficiaries and heirs.
Plus, estate planning mistakes can create added costs, stress, and confusion for your heirs, especially if probate is involved, and can lead to arguments between siblings about such issues as an unfair inheritance, planning for your funeral, or your wishes for the distribution of such things as family heirlooms.
Perhaps, you’ve already seen, firsthand, the results of failing to create a plan or poor estate planning because your parents made some mistakes when creating their estate plans. What can you learn from your parents’ estate planning mistakes?
Some of the more common estate planning mistakes that your parents may have committed include:
- Not talking about it with family and/friends
- Only naming one beneficiary
- Failing to name a financial and/or medical Power of Attorney
- Not leaving specific instructions with regards to inheritances for minors
- Not keeping the estate plan updated and current
- Failing to make the right beneficiary designation on life insurance policies, retirement accounts, etc.
Probate will teach you a lesson
One of the biggest estate planning mistakes is not establishing a living trust to avoid probate. A living trust is a legal document that is created during your lifetime to allow for an easy transfer of your assets to your heirs and beneficiaries as per your wishes.
As the trustor or grantor, you transfer your assets into the trust, but remain in control of them during your lifetime. When you die, a designated person, the trustee, is responsible for managing those assets and distributing them according to your instructions.
In addition to saving your beneficiaries from having to go through the time-consuming probate process, setting up a living trust has other benefits including, but not limited to:
- Ensuring the privacy of your family
- Protecting yourself if you should become incapacitated
- Keeping your assets within your family
- Protecting minor children
If you’re worried that your child won’t make good decisions about spending their inheritance, put the money in a living trust. The trustee that you have chosen will distribute the money to your child as per your instructions.
Estate planning for your kids
If one or both of your parents become incapacitated or die, would you know where their estate planning documents are kept or how to find out if a trust exists?
Hopefully, you’ll learn from your parents’ estate planning mistakes, but how can you ensure that you won’t make some of those same mistakes? By working with an experienced estate planning attorney who can help you put a well-crafted plan into place.
Whether you’re already a parent or hope to have children in the future, it’s time to start thinking about the steps you’re going to take when it comes to estate planning for your kids.