Benjamin Franklin is quoted to have said, "If you fail to plan, you are planning to fail." Many people fail to establish an estate plan. Even if you have done some estate planning, you might not have covered everything. That may be OK, because you can still change course. If you have an estate plan, any mistakes you've made are a sign you should update it. Here are some of the most common errors people make in estate planning:
1. Not having a will - Even a simple will is better than nothing. Because once you're gone, if you haven't written anything down, no one will know your final wishes. Having a will can also prevent potential conflicts and decisions that go against your intentions.
2. Having a will signed incorrectly - In a case involving a contested will in California, a man had signed a pre-printed will on the wrong line, making himself the sole beneficiary, therefore voiding it. An estate planning attorney can help you ensure you've taken care of this and other parts of your estate plan properly. It is quite common for people to sign wills in the presence of just two witnesses - in Maine, you need not only two witnesses, but a Notary Public.
3. Not planning for incapacity – If you have a will, you might not have considered creating a durable power of attorney or advance health-care directives, which name certain people to act for you in case you become incapable of making or communicating decisions. Regarding your end-of-life care, if your loved ones don't know your wishes, they or others could make choices you wouldn't have wanted. The best time to plan is while you still can.
4. Not planning for Medicaid eligibility - Known as MaineCare in Maine, but under other names in other states, Medicaid covers most types of medical care and services, including long-term care. To become eligible for coverage, you must meet certain requirements, including asset limits.
Some people don't consider long-term care in their overall estate plan. For example, putting a home in a revocable trust can prevent it from going through probate. However, for MaineCare eligibility purposes, the value of your home would become a countable asset if you put it in a revocable trust.
5. Not talking to an estate planning attorney - Pre-printed or Internet forms can help you save on the cost of an estate plan. But, before you consider them, advice from an estate planning attorney can help you avoid mistakes, such as signing outdated documents that don't follow current laws.
6. Not talking about your final wishes - You can assume a loved one wants to inherit your home after you pass away. But what if someone else would appreciate it more? Or, you could name someone to act as your power of attorney, but they might not be able to fulfill that role. Talk to those most important to you to see who you should include. It can help prevent potential problems later.
7. Not thinking of your beneficiaries' futures - If your child is a minor, what will happen when they grow up? Will they be mature enough to handle an inheritance? When you create an estate plan, think through not just your future, but that of your beneficiaries.
8. Not storing your estate plan securely - What will happen when your loved ones need to access your estate plan? Will they know where it is? Will it still be around? Make sure the people you trust to handle your affairs know where your documents are.
9. Not updating your estate plan - Once you've finished it, it's easy to forget about it. But if you or a beneficiary marries, has a child, or experiences other life changes, your intentions might no longer apply. Review your estate plan at least once a year and update it accordingly.
10. Not considering potential tax consequences - Changing a beneficiary on a life insurance plan could cause them to owe money later. If you deed a house to your child, they might face capital gains taxes upon its sale. Before you change your beneficiaries or how you want to distribute your assets, consult a financial planner, an accountant, or an estate planning attorney.
11. Forgetting to include digital assets - Who will be your legacy contact for a personal website or any of your social media accounts? Also, as cryptocurrency and electronic forms of payment, such as PayPal, become the norm, it can be easy to lose track of these assets. Think about what you could leave behind online, too.
These examples are just a few common estate planning mistakes. Creating an estate plan requires thought and effort. But in the end, knowing that your wishes will be carried out properly can ease any anxiety. You can't change the past. However, an estate plan gives you control over your future and you can correct any errors now.
If you need help creating or fine-tuning an estate plan, call (207) 377-3966 or contact us online today.