1. Mistake #1 - Failing to Make an Estate Plan
When it comes to basic estate planning, I've found that many people simply avoid it. The typical reasons why range from fear of death, to misperceived expensive costs, to complicated family situations. Suffice it to say that without an estate plan in place, you'll be leaving your loved ones in the dark, and they'll end up spending thousands of dollars that you thought you saved by not creating an estate plan figuring out what to do for you if you become disabled and what to do for themselves after you die. Avoid this #1 estate planning mistake. Begin your planning early, while you still have your wits about you, and then review and update your estate plan frequently to insure that it will work the way you intended when it's actually needed.
2. Mistake #2 - Forgetting About the Little Things
When it comes to basic estate planning, I've found that many people overlook making an estate plan for their personal effects, including jewelry, art work, and collectibles. They simply assume that their loved ones will be able to agree on how to divide it all up. In my experience, these things are what people argue over the most. In fact, a few years ago I worked on an estate where two brothers litigated for three years over the "stuff" left in their mom's house. They ended up spending over $50,000 on attorney's fees fighting over items that appraised for only $5,000. Don't let this #2 estate planning mistake happen to you and your loved ones. Ask what everyone wants and then make a simple but smart estate plan for your "stuff."
3. Mistake #3 - Failing to Fund Your Revocable Living Trust
When it comes to basic estate planning, I see this mistake over and over again - people who don't understand the importance of funding their revocable living trust. If you've taken the time and spent good money on creating a solid foundational estate plan, then don't stop there, or your assets will end up in a court-supervised guardianship if you become mentally disabled, and they'll have to go through probate after you die. Instead, take the time to fund your assets into your trust and update the beneficiaries of your life insurance and retirement accounts. Otherwise, you'll have committed this #3 estate planning mistake and your estate plan will only be worth the paper it's written on.
4. Mistake #4 - Choosing the Wrong Fiduciaries
When it comes to basic estate planning, this is another common mistake I see over and over again - people who choose the wrong people or institutions to serve as their Personal Representatives, Successor Trustees, Attorneys in Fact, and/or Health Care Agents. Choosing the right fiduciaries for your estate plan is just as important as creating the plan in the first place, since your plan won't work as you intended if your fiduciaries aren't capable of doing the jobs you've given to them. Avoid this #4 estate planning mistake by working with your estate planning attorney to choose the right people or institutions for the right jobs.
5. Mistake #5 - Making Your Estate Plan Too Complicated
When it comes to basic estate planning, some people go over the top and make their estate plan so complicated that it will take over a dozen lawyers and accountants and a judge, not to mention hundreds of thousands or even millions of dollars, to unscramble the plan and make it work. An overly complex estate plan will not only frustrate your loved ones, but it will also tie the hands of your fiduciaries since they won't be able to do their jobs without seeking expensive professional advice. Avoid this #5 estate planning mistake by working with your estate planning attorney to create a practical and common sense estate plan that will work as you intended but without the need for advice from multiple attorneys and accountants.