Life is unpredictable, and it’s impossible to plan for every possible event that could befall you. However, there are certain steps that you can take to make sure that your estate plan is as thorough as possible – so that you can avoid some common pitfalls that many people with incomplete estate plans face.
Forgetting to include powers of attorney
Some people create a will and leave it at that. Unfortunately, a will might not be enough to take care of all eventualities. To be on the safe side, you need other estate planning documents as well – such as powers of attorney (POAs).
POAs are documents that give someone you trust the ability to make important decisions on your behalf concerning your health, your finances and your property. This is important, because you never know if you will suffer an accident or disease that doesn’t kill you, but leaves you unable to manage your own estate.
Failing to update your estate plan after remarriage
Estate plans are not something that you can establish and then forget about for the rest of your life. When major life events – such as divorce and remarriage – occur, it’s best to update your estate plan to make sure that it still reflects your current wishes.
For example, if your new spouse brings their own children to the marriage, you might want to update your plan to include your stepchildren by name, so that they will not be left out when you pass away. Your new spouse can do the same for your biological children.
You should also be sure to replace any references to your old spouse with your new spouse on things such as your life insurance policy.
Not leaving clear instructions for your executor
Your executor has a huge job. They have to track down all of your assets – including intangible things such as investments and retirement accounts. Then they have to pay all of your debts and pending taxes out of your estate, and then distribute what remains according to your will.
You can do a lot to make things as easy as possible for them. If you leave a clear list of your assets, where they’re found, and how to access them, your executor will not have to spend time hunting for them, and they will be less likely to make a potentially costly mistake.
No one wants their family to have to face possible lawsuits and conflict after they die. If you are proactive in shoring up holes in your estate plan, you can make things as easy as possible for the loved ones that you leave behind.