People are routinely on high alert when it comes to the potential for mistakes that can have negative financial consequences. Strangely enough, many of the same individuals are not as careful when it comes to inheritance planning matters. In an effort to raise awareness, we will highlight a few estate planning traps that often ensnare the unwitting.
A 2019 survey that was conducted by Caring.com underscores the widespread phenomenon of estate planning unpreparedness. They found that only 40 percent of American adults have estate plans in place, even though two thirds of the people that responded felt as though planning was important.
Clearly, there is a lot of procrastination out there, but it persists longer than you may think. The survey found that 34 percent of participants 65 years of age and older are going through life without any estate planning documents. The figure is 61 percent for people that were in the 45-54 age group.
Why do people keep their heads stuck in the sand? You have to assume they think that they will always have time to take care of it later on. Unfortunately, far too many individuals wait too long, and their family members are left behind to deal with negative circumstances.
The stakes are quite high when you are talking about your final acts of giving to the people that you love the most. Estate planning is one of the core responsibilities of adulthood, and you should take action sooner rather than later if you are among the unprepared.
The False Security of DIY Estate Planning
There are websites that sell generic, boilerplate last will documents. A lot of people that have been procrastinating decide to download one of these worksheets on a given day. They fill in the blanks, and they feel as though they have put the matter behind them once and for all.
In reality, a last will is not the best asset transfer vehicle for a significant percentage of people. Plus, if you go the DIY route, are you sure that the document that you create will be valid in the eyes of the law? Do you know how long it will take for your loved ones to receive their inheritances? Can someone challenge the will?
There is nothing wrong with finding instructions on the Internet that enable you to take on some types of do-it-yourself project. However, you have to know where to draw the line. Legal matters that involve significant assets transfers are pretty important, so you may want to obtain legal advice before you make any decisions.
Ignoring Latter Life Eventualities
Far too many people do not consider unpleasant realities that can be part of aging. The life expectancy for someone that is turning 67 today is 85 for a man, and 87 for a woman. To get right to the point, Alzheimer’s disease strikes about a third of people that are 85 years of age and older.
This is not the only cause of incapacity, so it is very possible that you will become unable to make sound decisions on your own at some point in time. If you do nothing to prepare for this eventuality, you may become a ward of the state. A conservator would be appointed to act as your representative.
You can avoid this and take the matter into your own hands if you execute incapacity planning documents called durable powers of attorney. With a durable power of attorney for property, you can name an agent to handle your financial affairs.
A durable power of attorney for health care can be added to empower a health care decision maker. This is an advance directive for health care, and you can include a companion directive called a living will. In your living will, you would state your preferences regarding the use of life-sustaining measures.
Attend a Free Webinar!
You can learn a lot more about commonly made mistakes and the steps that you can take to avoid them if you attend one of upcoming webinars. They are being offered free of charge, but we ask that you register in advance. To see the dates, visit our webinar schedule page and click on the one that interests you to obtain registration information.
- Act in Advance to Prevent a Conservatorship - April 27, 2021
- Beneficiary Designations and the SECURE Act: Prior Designations - April 20, 2021
- Beneficiary Designations and the SECURE Act: Eligible Designated Beneficiaries - April 16, 2021