1. Your plan is not personalized. You may have a Last Will & Testament or even a trust, but do you know what it does? Do you feel like it fits you well? Or are there some things about it that you wish you could change? Some people end up with fill-in-the-blank forms that do not reflect their families, their values, goals or concerns. You need a plan that fits your goals. Are you comfortable with your existing plan?
2. Disorganized assets. You may have a great Will or trust, but how you own assets or what your beneficiary designations say could undo what your Will or trust says. Assets can be owned many different ways (individually, jointly, in a corporation, LLC, trust), while beneficiary designations cover your IRA, 401(k), life insurance, and annuities. We need to make sure your Will or trust fit together with your asset instructions like puzzle pieces. For instance, no assets are governed by your trust unless the asset is transferred to the trust. And a beneficiary designation will rule first over what your Will says about an asset (just ask plenty of ex-wives out there who got surprise life insurance when their ex-husbands died!) How will you make sure your assets fit with your planning? What are some beneficiary designations you need to check and/or update?
3. Your plan is not up to date. How old is your plan? 10, 15, 20 years old? Some people signed an old dusty Will many years ago and have not looked at it since. But their lives have changed in many ways since they signed it. Life is always changing. Our assets go up (or down), we retire, get married, divorced, have grandkids, move, remarry, loved ones pass away. All those things affect your plan. When your plan does not adjust to your life changes, you are left with a mess later. What life changes have occurred since you last updated your plan?
4. After death legal fees spiral out of control. Do you know that many lawyers over the years have made more money cleaning up messy estates after death than they do planning the estates? It’s the dirty little secret of estate attorneys. Don’t just assume “it will all work out fine after I’m gone.” A cheap Will now may lead to expensive court battles later. But a good plan now, where you invest your time, energy (and yes your money) is the best way to reduce expenses at your death. A good plan will avoid probate court, avoid family battles, and reduce the legal fees needed.
5. Your family is not prepared for the plan. When the time comes for your plan to start working (upon your disability or death) will your family know who to call and what to do? Will the people you’ve chosen to be your “helpers” do their job well? Or will their personality result in procrastination, extra stress or conflict among siblings? Who are your helpers, and have you talked with them about it? Bad estate plans break up good families.
6. Your plan leaves your family open to ongoing risks. A good estate plan has two parts. First, smooth transfer of assets (avoiding probate, taxes, family fights). Second, protecting what you leave behind. If you leave an inheritance to your son, what if he later gets divorced or sued? Will your hard earned money end up with an ex-spouse or a creditor? Good planning can protect against that risk and many others, such as nursing home costs during your life, kids who spend too much, disability benefits, many more. Are there any potential risks you can anticipate?