Estate planning is necessary to help you protect your assets and plan for your family’s future. However, people often make mistakes when creating a plan.
Failure to plan for incapacity
If you become incapacitated, you can’t make decisions for yourself. Incapacitation can happen due to illness or injury. If you don’t make plans in the event you become incapacitated, your family may have to go through the court system to get someone appointed as your guardian. Court appointments can be long and expensive, so it’s best to have a plan ahead of time.
Lack of proper documents
You’ll need a few crucial documents for your estate plan besides a will, including a power of attorney and a healthcare directive. A power of attorney gives someone the authority to make financial decisions on your behalf if you cannot do so. A healthcare directive outlines your wishes for medical treatment if you cannot make those decisions yourself.
Considerations for those with existing plans
It’s not just those who are creating new plans who make mistakes, individuals with existing plans often do as well. Many people presume that when a will, power of attorney or other supplemental document is created, that’s it. However, such documents need to continuously be revisited in the event of:
- A divorce
- A remarriage
- A remarriage with a blended family
- A death
- A new baby
Ensuring the right individual is designated to make decisions on your behalf in the event your are incapacitated, for instance, could result in an action taken contrary to your wishes. If you have an old beneficiary designation on file, your assets could go to that person if you haven’t made the proper updates.