In this blog I want to dive into one of my favorite topics—estate planning—and give you my top 10 dos and don’ts. Now, before you think, “Dale, estate planning is just for the wealthy, right?”—let me stop you right there. Estate planning isn’t just for the rich and famous, like the Elon Musks of the world. No, it’s for everyone, young and old. We all have assets, whether it’s a house, savings, or even just your prized collection of comic books. Estate planning is about safeguarding those assets and ensuring your loved ones are taken care of after you’re gone. But, and this is a big but, you’ve got to have it in writing. That’s the whole point of estate planning.
So, whether you’re just getting started or you’re reviewing a plan you already have, here are the top 10 do’s and don’ts to keep in mind.
The Do’s
1. Do start early. The biggest mistake people make is waiting too long. Life is unpredictable. Having an estate plan in place while you’re healthy ensures that your wishes will be respected if something happens to you. Just this morning, I spoke to a client who was in crisis mode because her parents hadn’t planned ahead. Now, our options are limited. Had they started earlier, we’d be able to protect a lot more of their assets.
2. Do update your plan regularly. Things change—marriages, divorces, kids, grandkids. Maybe you’ve acquired new assets, like a beach house (though with the storms these days, I’m not sure I’d recommend that!). You’ve got to review your plan every 3 to 5 years, or after any significant life event, to make sure it still aligns with your current wishes.
3. Do name guardians for your minor children. If you have young kids, naming a guardian is one of the most critical decisions you can make. Make sure it’s someone you trust, who shares your values, and who will get along with your children. Don’t leave this to chance.
4. Do consider a trust. Specifically, a living or revocable trust. Trusts are great for avoiding probate, maintaining your privacy, and giving you more control over how your assets are distributed. They’re especially helpful if you become incapacitated and want a smoother transition in managing your assets.
5. Do designate beneficiaries properly. You might have life insurance or a 401(k) with beneficiary designations. Make sure these are up-to-date! I’ve seen situations where people got divorced and forgot to change their beneficiary. Trust me, you don’t want your ex-spouse to get that 401(k).
6. Do always have a durable power of attorney. A power of attorney lets someone you trust make financial decisions on your behalf if you’re incapacitated. Without it, your loved ones could end up in probate court, spending thousands to get someone appointed.
7. Do plan for healthcare decisions. This is where an advanced directive or healthcare power of attorney comes in. It lets someone make medical decisions for you if you’re unable to. If you don’t have one, your family could be forced into a court battle to get guardianship, and again, this could cost thousands.
8. Do minimize taxes. I’m all about reducing taxes, especially since the government gets enough of our money already! There are tax-advantaged strategies and charitable donations that can help reduce the tax burden on your estate.
9. Do seek professional help. Estate planning can be complex. Work with an estate planning attorney—someone who specializes in this every day, not just a general practitioner. They’ll guide you through the legalities and ensure your plan is tailored to your needs.
10. Do communicate your plan. Let your family or close friends know about your estate plan. Don’t keep them in the dark. Also, let them know where you keep your important documents. I’ve seen too many cases where people keep things in a safety deposit box, and no one can access it when they need to. Just keep your documents in a safe place at home.
The Don’ts
1. Don’t procrastinate. I can’t stress this enough. Too many people think estate planning is something they’ll get around to “someday.” I’ve even done guardianships for young adults who never thought they’d need one. Get it done now, while you can.
2. Don’t forget about your digital assets. Your email, social media, cryptocurrency, and other online accounts all need to be accounted for. Make sure someone knows how to access them. A good friend of mine passed away years ago, and I still get Facebook birthday reminders because no one can access his account to close it.
3. Don’t overcomplicate the process. Estate planning doesn’t have to be complicated. For most people, a simple will, power of attorney, and advanced directive will do the trick. Don’t get bogged down trying to make it perfect.
4. Don’t rely solely on a will. A will is important, but it won’t cover everything. Some assets, like 401(k)s or life insurance, bypass the will and go straight to your designated beneficiaries. Make sure all your assets are accounted for, either by a will or a beneficiary designation.
5. Don’t name inappropriate executors or trustees. Just because someone is your child doesn’t mean they’re the right person to manage your estate. Make sure you choose someone reliable and trustworthy. And be aware that some courts might require them to post a bond, which requires good credit.
6. Don’t neglect planning for incapacity. Estate planning isn’t just about what happens when you die. It’s also about who will manage your affairs if you can’t. Without a durable power of attorney, your family could end up in court fighting over guardianship.
7. Don’t ignore debts. Make sure your estate plan addresses any outstanding debts. As an executor, you’re responsible for ensuring debts are paid before distributing assets to beneficiaries.
8. Don’t assume family will know what to do. Don’t leave your wishes up to interpretation. Let your family know exactly what you want, or you could end up with sibling conflicts and family drama.
9. Don’t ignore special needs. If you have a child with special needs, you don’t have to leave them out of your will. You can create a supplemental needs trust to ensure they’re taken care of without losing their government benefits.
10. Don’t DIY without understanding the risks. DIY wills might save you money up front, but they often leave out important legal nuances. Mistakes could invalidate your entire plan, so consult a professional if you’re not sure.
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