Common Estate Planning Mistakes

An estate plan is more than just a Will — it is a comprehensive strategy for protecting your legacy and your loved ones.  But crafting such a plan can be a minefield of potential missteps, especially if you don’t have the right experts on your side.  Below, we look at some common mistakes people make and what you can do to avoid them.

Not Getting Around to Writing a Will 

One of the biggest mistakes many people make is simply not having a Will in the first place.  

If you die without a Will, you’re said to have died ‘intestate’, and your assets will be distributed in line with rules specific to your state or territory.  This might result in loved ones getting a different share of your assets than you had intended.  

Not Informing Your Family of Your Will’s Whereabouts 

Your Will is of no use to anyone if no one knows where it is located, and leaving your family in the dark could create headaches during what is undoubtedly an already difficult time.  

To spare your family or executor digging around your belongings or desperately calling local law firms, you should let them know early on where you intend to store it.  This might be in a safe deposit box at your bank, with your lawyer, or in a secure location in your home.  

Ignoring Incapacity Planning 

Many people forget there is more to estate planning than deciding where your assets will go once you pass away.  It is also about preparing in case you lose the ability to make key decisions about your health and finances.  

If your estate plan does not cover incapacity planning, conflicts could break out among your family members over things like medical treatment or which person is chiefly responsible for your care.  In the worst case scenario, a lack of clear directives could even lead to legal disputes between them. 

Ideally, you should have the following in place: 

• Advance care directive: this document lets doctors know what type of care or treatment you want if you are no longer able to communicate or make the decision for yourself.
• Enduring power of attorney: this document authorises someone to manage your financial and legal affairs on your behalf (e.g. operating bank accounts, signing documents and selling assets).
• Enduring power of guardianship: this document authorises someone to make health and lifestyle decisions on your behalf (e.g. where you live and which medical treatments you receive).

Not Adequately Providing for Dependents 

If someone who is entitled to a share of your estate goes without a mention in your Will, they might decide to get the courts involved.  This can be an expensive and emotionally trying experience for everyone involved and can lead to the court adjusting the distribution of assets in potentially undesirable ways. 

While there is no ironclad way to prevent future claims on your estate, you might be able to reduce the chances of this happening by showing that anyone eligible to contest your Will was considered and there was some effort to provide for them.  If there are people you intend to give nothing, it might help to write a statement explaining your reasons so it cannot be argued that you simply forgot. 

Not Updating your Will After a Major Life Change 

Your Will is not something you can set and forget — ideally, you should be reviewing it as your circumstances change and your assets grow.  

Some scenarios that should trigger a review include: 

• If you buy or sell a property
• If you marry, separate, or divorce
• If you receive an inheritance
• If one of your beneficiaries passes away
• If a new beneficiary is born
• If you start a business

Appointing An Executor Who Is Not Up To The Task 

Your executor is the person tasked with managing your estate after you pass away, so they should be someone you trust to rise to the occasion.  When the time comes, they will have to round up your assets, handle any outstanding debts, and make sure everything goes where you intended it to — all while dealing with the grief of your passing. 

The role can make large claims on their time, so if you are not confident that they can fulfil their duties you might consider appointing an independent party instead (such as a solicitor, accountant, or even a specialist trustee company).  Of course, that will mean paying a fee for their services. 

If you wish to discuss your estate planning arrangements, please contact our office to arrange a time to meet and discuss.