Estate Planning: Important Things That Are Often Overlooked, But Less Often Mentioned

The internet is full of estate planning articles that include lists of common mistakes people make, but they often talk about the same things. Here are some less frequently mentioned but equally important things for you to consider.

Plan for older children, not just minors.

Most parents think of a guardian for young children, but few plan for the inexperience and poor judgment of adult children. Consider what happens when a child turns 18. The child is now an adult. Without proper planning, he will be entitled to receive her entire inheritance, no strings attached. How many 18 year olds can handle that? How about even older adult children? Are yours old and mature enough to handle money responsibly? Would it be better to leave control of the inheritance to someone more suitable, giving your children (or grandchildren) time to learn how to manage it? What about loved ones with special challenges, such as substance abuse, divorce, physical or mental limitations? These are all circumstances that may warrant special protection. None of this can happen without proper planning.

Don’t forget about goals either. Have you considered including an “incentive” in your plan to encourage the achievements of your loved ones? Don’t just plan for college expenses—consider directing a significant monetary gift to the young person as soon as they earn their first degree. How about giving a certain amount to charity, but allowing descendants to select the recipients? This can be a wonderful way to teach philanthropy.

Don’t assume that your will is always in control.

Many people mistakenly assume that their Will must be followed, “no matter what.” This is not true when it comes to assets that are noble, such as real estate and financial accounts. If someone else is in title with you, that person could be entitled to the entire property when you die. If so, his Will is ignored. The same goes for assets that have a beneficiary designation, such as life insurance or retirement accounts. Consider the case of the woman whose adult daughter was in a car accident, leaving her with long-term injuries and large medical bills. The woman’s greatest asset was her life insurance policy. The woman’s will said that she would give her daughter all of her assets, but the life insurance beneficiary designation said that she would give the insurance to charity. The life insurance beneficiary designation is as followed. The Will of the woman makes no difference.

Remember that you may need cash to carry out your plan.

“How are you going to pay for that?” People make plans to pass on their assets when they die, but they forget this simple question. They order a house to be kept to use as the family’s vacation home, but leave nothing to pay the mortgage, taxes, insurance, or maintenance. They forget that their debts and expenses must be paid when they die, they don’t leave cash to cover them, and they don’t direct what they have to sell to pay them off. Other common cash needs include funeral arrangements, running a family business, supporting dependents, paying taxes, paying for the funeral, and paying for the estate. You have to plan for liquidity and if you have a particular asset that you don’t want to sell unless absolutely necessary, you have to say so in your plan or you risk it going up for auction!

Don’t hide your information.

Information is key! The things that are stored in your head are of no help if you are incapacitated or have died. Do you use the Internet for billing and statements? How will your loved ones know what bills you have if they never arrive in the mail? How can they access their email and online accounts if they don’t know the web addresses or passwords? Your Internet accounts should be listed with clear instructions.

Putting your Will or Trust “in a safe place” can be just as problematic. If nobody can find them, nobody can follow them. In one case, a woman had sewn her will to the bottom of the living room curtain. The find was made purely by chance. A “safe” place to keep your will is a safe deposit box at the bank or a fireproof box at home, a copy should be with your attorney, and at least one loved one should know where the original can be found . .

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