The good thing about making mistakes when it comes to estate planning is that you won’t be around to suffer the consequences. The downside is that your loved ones could be subjected to further pain. To prevent you and your family members from enduring more stress, misery or confusion than necessary, here are five estate-planning booboos to avoid, according to an author.
The Financial Post's recent article, titled "‘Your grandfather’s dead. It’s my money now': Five estate-planning mistakes to avoid," discusses some common estate planning mistakes.
Here they are:
Leaving everything to someone with private instructions to donate to charity. Yeah, that's going to work. Well, who's going to make them? Even though your daughter swore she’d donate a portion of your estate to a specific charity, there's no guarantee she'll do that after you pass. If there’s a charity that you want to give to, spell it out in your will.
Create your will based on today’s situation and forget it. Not good. The original article says to plan ahead and review your will regularly. For example, you shouldn't say in your will that you’re leaving your current house on Rockford Street to your niece—if you move before you die and don’t update your will, your niece might not get a thing. The original article also cautions against leaving one child more money than another because you believe that one is in better financial shape—you might not know the real situation.
Give up control of your finances to your children. Simply put, if you give up control, you may not get it back.
Expect your children to give some of their inheritance to your grandchildren. It's quite possible that if you leave your assets to your children, that money may well be spent before it gets to the grandchildren. You can avoid this by leaving something to your grandchildren as a separate entity or give them money while you’re still around.
Trust a homemade will. If you’ve made your own will, you may have issues that you didn't even know about. If you’ve downloaded the will from the internet, is it from your state? When was the will form last updated?
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning
Reference: Financial Post (October 29, 2014) "‘Your grandfather’s dead. It’s my money now': Five estate-planning mistakes to avoid"