If mistakes are made when creating a will, even small ones, it could mean that your assets will not go to the people you intended. These errors often only come to light after you have passed away. Understanding the most common mistakes can help you avoid them.
Despite your children getting along well during your lifetime, attitudes may change when it comes to dividing your assets. Avoid using vague statements, such as leaving it to your children to divide your assets amongst themselves. Some of them may have a strong interest in certain assets, so designating those assets to them could be a wise decision.
Before creating a will, you should list out all your assets and decide who will receive which items. Life insurance policies, bank accounts, retirement accounts, investments, etc., should have designated beneficiaries and secondary beneficiaries. If you have only one name on these accounts but your will instructs the funds to be evenly distributed, conflicts may arise as the instructions in your will become void when there are beneficiaries specified on the accounts – only the account holders will receive everything. Ensure that the instructions in your will align with your designated beneficiaries.
These accounts often bypass the need for probate, but if you designate your estate as the beneficiary, they will need to go through the probate process. This means you may have to pay estate taxes on these accounts – at least on a state level.
Some family members may not have a direct blood relationship with you, but you may want to keep your assets within your lineage. You can add explanations on how money or assets will be passed on and who will have control over them after your passing, according to FinanceBuzz.
Lawyers at SteinSperling suggest that you proceed with caution before designating anyone to receive a large sum of money. Sudden wealth could have more drawbacks than benefits.
Some of your potential beneficiaries may not be financially responsible and may quickly spend their share on frivolous things. Adult children may face marital issues and head towards divorce. Some may struggle with alcohol or drug addiction.
By placing some assets into a trust, you can better manage various circumstances. Trusts can provide better control, limit assets, and establish time frames, which might be essential for underage or irresponsible children.
Creating a will can be done promptly. Many websites advertise quick completion. You can draft one in minutes, but whether it remains a good idea 5 or 10 years from now might differ.
New grandchildren may have been born, some individuals may have passed away, others may have developed addictions, and perhaps one of your children could now be divorced, etc. Any of these scenarios could be reasons to review and update your will to cover new life situations.
If you wish to disinherit someone, LegalNature provides some suggestions: it is necessary to clarify in your will that omitting someone was intentional, not an oversight.
Keep your will with other important documents required for its proper execution. After your passing, someone needs to know where you kept your will. This person could be a family member, an attorney-in-fact, or your executor. You can store your will in a safe deposit box, a fireproof safe, a home safe, or any other secure location.
If nobody knows where to find your will, even if you have one established, your estate may need to go through probate for distribution. Hence, it is vital for someone to know where the will is stored and how to access it.
If you fail to designate an executor or personal representative to distribute your assets, the court will appoint one. This is a position of responsibility, requiring the individual to work with the court, family members, and financial institutions. It entails a significant amount of time, effort, and money. Specifying an alternate person is also advisable, but make sure to communicate with them first to see if they’re willing before writing down their name.
If you have young children at home, it is crucial to appoint someone to care for them after your passing. Not everyone is willing to take on this responsibility, so careful consideration is necessary to determine who would be a suitable guardian, if needed.
When creating a traditional will, you can also establish a living will. This document, also known as an advanced directive, informs people how you wish to receive treatment in the hospital when you lose mental capacity, consciousness, or are near the end of your life. The content of this document varies in each state, so consult with a doctor while you’re hospitalized.
The Mayo Clinic states that a living will guides family members and doctors in addressing questions such as whether you want to rely on life support machines when survival is impossible without them, which treatment options you wish to refuse – like mechanical ventilation, feeding tubes, dialysis, etc., any religious considerations, and whether you want to be an organ donor.
A living will can also assist your family members in making the tough decision to remove life support if necessary. Some family members may disagree on pulling the plug, but if you spell out your wishes in the document, they can be more at ease knowing that this is what you wanted in that scenario.
By consulting an estate planning attorney or financial advisor, you can ensure that your intentions are clearly outlined in your will. They can ensure that your documents comply with state laws and achieve your estate goals.