Regardless of your age, having a will or estate plan is essential for many reasons, and isn’t just limited to passing assets at death. A will provides necessary asset passing, although many times isn’t enough when situations become more complicated. Although estate plans and wills become typically become active at death, they can be helpful during catastrophic life events, while still living. One such document that is part of both an estate plan and a will is a Medical Directive, which provides the blueprint for your wishes in the event of a debilitating injury or illness.
Without estate plan and will documents in place, the decision is left to your family to make decisions you wouldn’t have been happy about. At times these decisions may lead to conflict among family members, additional expenses paid by heirs or from your estate, or an extended probate at death as its run through the court system in your state of residence.
There’s just as much planning for living as there is for dying, which is why there is no reason to wait to have either done. We recommend working with an attorney that specializes in this type of law (and not everything else). As you age, have children or acquire more assets, your situation changes and so should your estate plan. There are common mistakes to avoid in every estate plan or will to prevent:
- Naming Beneficiaries and Contingent Beneficiaries. Update name changes, changing and removing beneficiaries should be done periodically to ensure your estate plan has the most recent information. Common mistakes include misspelling names, incorrect dates of birth, and the wrong former last name of a beneficiary. This pertains to investment accounts that require recipients. Naming a child as a beneficiary requires legal due diligence, as minor can’t inherit assets and need an adult to manage the assets until the child is eighteen years old (or older).
- Naming Specific Investments. As people age, the likelihood of an investment no longer owned by the grantor is likely, unless the estate plan or will has been updated to remove it. If a specific asset is named to pass to an individual and no longer part of the estate, it may cause extended probate or lead to the asset being repurchased or ‘equalized’ through another monetary settlement to the beneficiary.
- Not Naming the Beneficiary of your Financial Accounts or Life Insurance Policies as your Estate. If you intend to have the estate plan be the final legal document that contains everything in your estate, you can eliminate problems later. Having some accounts or policies that name an individual and some that name the estate may cause heirs to contest the estate plan or will. Your attorney will determine which is best for your situation and wishes. Having a will or estate plan drafted by a legal professional is strongly encouraged as an integral piece of financial planning. Secondly, keep us updated on your desire to changes beneficiaries, contingent beneficiaries, and changes to investment accounts we may not manage but have included in your financial plan. Lastly, please provide us with a copy of your estate plan, will, and other relevant legal documents as they pertain to your investments to help ensure the information we have is streamlined. We are here to provide you with any necessary financial records requested by your legal professional as you create or update your estate plans and wills.
*Advisory services offered through Trajan Wealth, L.L.C., an SEC-registered investment adviser.
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