The biggest mistake anyone can make with an estate plan is to not have one at all. Although no one likes thinking about their demise, it is still essential to have a basic estate planning document in place. Over half of Americans lack the essentials in this regard.
It is not enough to simply have the documents. You need to ensure you have written them correctly to ensure the state carries out your wishes exactly as you intend. You want to avoid the following mistakes at all costs.
Failing to consider whether beneficiaries can handle receiving a large amount of money
Parents want to make sure their estate plan takes care of their children, often through money. However, you need to be reasonable if one of your children suffers from drug addiction. You do not want to feed that addiction by giving him or her a large sum of money all at once. Your other kids may be responsible enough to handle that windfall, but you may want to consider creating a trust for a son or daughter who needs help.
Failing to plan for a beneficiary potentially passing away
It is possible a loved one you name as a beneficiary will pass away before you do. If this is the case, you want to ensure the money goes someplace else where it can help your family. One phrase you may want to include in the document is that all money goes toward “all lawful children equally.”
Failing to deal with guardianship issues when you have minor children
When your children are still under the age of 18, you want the money to go to an adult looking after them. You need to assign a guardian to your children until they become adults. It may even be prudent to set forth guidelines for how your kids should spend the money. For example, it could go toward the kids’ college funds.