A comprehensive estate plan is often a complex series of documents that clearly state an individual’s wishes for the future. Whether it is the distribution of assets, or naming someone as a financial or medical proxy, the estate plan must be well-crafted and refined over the years. Unfortunately, many people leave out crucial elements.
While every estate is different, here are four common mistakes that individuals make when drafting their estate plan:
- Forgetting to include digital assets: Over the last two decades, digital assets have gained popularity due to their flexibility and ease of use. Many things now have either an online component or a digital-only experience. From an entertainment collection to an online storefront, these assets can carry significant value. It is crucial that you include them as well as written transfer of ownership in your estate planning documents.
- Forgetting to update the plan after significant events: Many individuals believe that the estate plan is a one-and-done set of documents. In fact, you should review and revise a comprehensive estate plan every few years. Certainly, individuals should update the plan after every significant life event. These events can include a change in marital status, the birth of a child or the purchase of a new home.
- Failing to name secondary beneficiaries: Many individuals forget to include secondary beneficiaries for larger assets. Vehicles, homes, income properties or vacation cabins, for example, are often left to close friends or loved ones. If one of these individuals dies before the decedent, it can throw the estate into disarray.
- Failing to include travel expenses or shipping costs: It is important to remember that heirs will not always live in close proximity to the decedent. Many individuals include provisions that allow the estate to pay travel expenses or shipping costs on assets to financially help these heirs.
There are numerous other aspects of the estate individuals should include in their plan such as sentimental property and the erasure of any loans made to family members. Even after writing the plan, it is wise for individuals to carefully review numerous aspects of each document and ensure they accurately reflect their wishes.