1. Mistake #1 - Failing to Make an Estate Plan
When it comes to estate planning, many people simply chose to avoid it. The typical reasons why people avoid planning range from fear of death, to sticker shock about the cost, to complicated family situations. Yet without an estate plan, you'll be leaving your loved ones in the dark. As a result, they'll end up spending thousands of dollars that you thought you had saved by not creating an estate plan when they have to figure out what to do for you if you become incapacitated and what to do for themselves after you die. Instead, begin your planning early, while you still have your wits about you and can make informed decisions.
2. Mistake #2 - Failing to Address Your Personal Effects
When making an estate plan, many people overlook including details about who gets their personal effects, such as jewelry, art work and collectibles. They simply assume that their loved ones will be able to agree on how to divide it all up, or they decide that they want it to be divided equally like everything else. Yet in reality these are the things that people argue over the most because they're difficult to value and impossible to divide equally. Instead of ignoring your personal effects or stating that these items need to be divided equally, ask what everyone wants and then make a plan for what happens to your "stuff."
3. Mistake #3 - Failing to Fund Your Revocable Living Trust
Unfortunately, many people who create trusts don't understand the importance of funding them with their assets. If you've taken the time and spent the money to create a revocable living trust, then make sure you also take the time to retitle your assets into the name of the trust. Otherwise the unfunded assets will end up in a court-supervised guardianship if you become mentally incapacitated 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, your estate plan won't be worth much more than the paper it's written on.
4. Mistake #4 - Choosing the Wrong Fiduciaries
Another common mistake that estate planning attorneys see over and over again is clients who choose the wrong people or institution to serve as their Personal Representatives, Successor Trustees, Attorneys in Fact, and 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. Instead, work with your estate planning attorney to choose the right people or corporate fiduciary for all of the jobs required in your estate plan.