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Avoid These 6 Serious Estate Planning Mistakes

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This is a guest post by Dagmar M. Pollex, J.D, an estate planning attorney based in Braintree, MA.  

Putting together a life and estate plan designed to protect you from “Murphy’s Law” – those unexpected but not uncommon events that can upset your hopes for the future – is not really difficult at all. Nevertheless, I  see many of the same mistakes made over and over again. The truth is that without experienced guidance, you can lose a lot more than you save by using DIY estate planning software or going for the cheapest alternative.  The consequences of making any of these six serious estate planning mistakes can be devastating to your loved ones after your death.

The most frequent mistakes that I see – over and over again

1.  Not checking beneficiary designations and making sure you have named contingent backup beneficiaries. This is especially true for your retirement accounts.

2.  Not considering that your personal possessions may have more than their monetary value to your children and making a plan to distribute fairly and equitably.

3.  Not naming backup executors and trustees. A less than perfect backup is usually better than not having someone at all and leaving it to the courts to decide.

4.  Working with an estate planner who doesn’t take the time to make sure the ownership of your accounts and beneficiary designations are properly coordinated to make sure what you own passes on in accordance with your wishes and your estate plan.

5.   Acting as though estate planning is a once and done event. Update your estate plan periodically to protect yourself and your family as life circumstances, your assets, and the laws change.

6.  Leaving your family to conduct a morbid scavenger hunt by not leaving written documentation of your assets, including a list of your online accounts and passwords and where to find important estate planning documents.

My comment:  Estate planning is an often neglected piece of a comprehensive financial plan.  The items listed above and others can have dire consequences for your loved one’s if you pass away without having taken care of them.  Please make sure that you have your estate planning issues in order.  Whether your estate is modest or large, leaving your loved ones with a mess to clean-up after you are gone is not how you want to be remembered.  

Check out Dagmar’s blog and her Facebook page.  Follow her on Twitter as well.  

Please contact me at 847-506-9827 for a free 30-minute consultation and to discuss all of your investing and financial planning questions. Check out our Financial Planning and Investment Advice for Individuals page to learn more about our services.   

Photo credit:  Wikipedia

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Comments

  1. Evan Guthrie says:

    #5 :Acting as though estate planning is a once and done event” seems to be the most prevalent and the one that can be avoided by a little added effort of checking up on things periodically.

    • Roger Wohlner says:

      One and done for estate planning or any aspect of financial planning is generally a mistake. Life has a way of changing on us and our estate plan needs to be adjusted accordingly.

  2. Matt Becker says:

    When our son was born we considered using some of the cheap online services to do our wills but decided to work with an estate planning attorney instead. Though it costs more up front, I think it’s absolutely worth it to make sure that everything is tailored to your own situation. This area is too important to leave to a generic template.

    • Roger Wohlner says:

      Kudos Matt, this is one area where pinching pennies can lead to disaster. Hopefully you will outgrow your current estate plan before it is needed but this is important stuff for anyone with a young family.

  3. Suzanne says:

    Roger,
    Forgetting to update beneficiaries is a big one. In fact, I just remembered that I had better check my husband’s beneficiaries on his non-retirement accounts. His mother passed away in May and it just didn’t occur to us to check this due to so many details that needed to be handled.
    Suzanne

    • Roger Wohlner says:

      Thanks for the comment Suzanne and my condolences on the loss of your mother in-law. One note non-retirement accounts often would not have beneficiaries like retirement accounts, insurance and annuity accounts and the like. These could pass via joint ownership or perhaps via will or other document.

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