The internet is full of articles on estate planning that include lists of common mistakes people make, but they often talk about the same things. Here are some less commonly mentioned, but equally important, things for you to consider.
Plan for Older Children, Not Just Minors.
Most parents think about a guardian for young children, but few plan for inexperience and lack of judgment in adult children. Consider what happens when a child reaches age 18. The child is now an adult. Without proper planning, he will be entitled to receive his entire inheritance, no strings attached. How many 18 year-olds can handle that? How about even older adult children? Are yours of sufficient age and maturity to handle money responsibly? Would it be better to leave someone more suitable in control of the inheritance, giving your children (or grandchildren) time to learn to manage it? How about loved ones with special challenges, such as substance abuse, divorce, physical or mental limitations? These are all circumstances that may warrant special protection. None of this can happen without proper planning.
Don't forget about goals, either. Have you considered including an "incentive" in your plan to encourage accomplishments from loved ones? Don't just plan for college expenses - consider directing a meaningful monetary gift to the young person as soon as that first degree is earned. How about earmarking a certain amount for charity, but allowing the descendants to select the recipients? This can be a wonderful way to teach philanthropy.
Don't Assume Your Will Always Controls.
Many people wrongly assume that their Will must be followed, "no matter what." This is not true when it comes to assets that are titled, such as real estate and financial accounts. If another person is on the title with you, that person might be entitled to the entire property when you die. If so, your Will is ignored. The same is true for assets having a beneficiary designation, such as life insurance or retirement accounts. Consider the case of the woman whose adult daughter was in a car accident, leaving her with longterm injuries and large medical bills. The woman's biggest asset was her life insurance policy. The woman's Will said to give the daughter all of her assets, but the life insurance beneficiary designation said to give the insurance to charity. The life insurance beneficiary designation is the one that was followed. The woman's Will makes no difference.
Remember That Cash May Be Needed to Carry out Your Plan.
"How are you going to pay for that?" People make plans for passing their property on at death, but forget this simple question. They direct that a home be kept for use as a family vacation house, but leave nothing to pay the mortgage, taxes, insurance, or maintenance. They forget that their debts and expenses need to be paid when they die, fail to leave cash to cover them, and don't direct what should be sold to pay for it. Other common needs for cash include funeral arrangements, running a family business, supporting dependants, paying taxes, paying for the funeral, and paying for the probate. You have to plan for liquidity and, if you have a special asset that you do not want sold unless absolutely necessary, you have to say that in your plan or risk that it goes on the auction block!
Don't Hide Your Information.
Information is key! Things that are stored in your head are no help if you're incapacitated or you've died. Do you use the internet for billing and account statements? How will your loved ones know what bills you have if they never come in the mail? How can they access your email and online accounts if they don't know the web addresses or passwords? Your internet accounts should be listed with clear instructions.
Putting your Will or Trust "in a safe place" can be equally problematic. If no one can find them, no one can follow them. In one case, a woman had sewn her Will into the bottom of the living room curtain. The find was made purely by happenstance. A "safe" place to keep your Will is in a safe deposit box at the bank or a fireproof box at home, a copy should be with your lawyer, and at least one of your loved ones should be told where they can find the original.
Source by Helene P Dreyer Koch