When you’re creating your estate plan, there are a lot of key issues to keep in mind — and unfortunately, this means that sometimes things slip through the cracks. Sadly, the consequences of this can be dire, as omissions can affect not just what happens at the end of your life, but also the legacy you’re able to leave behind for the people who matter most to you.
In order to make sure this doesn’t happen to you, be on the lookout for these five common estate planning issues that you absolutely can’t afford to forget.
1. Updating your beneficiaries
One common mistake that many people make is failing to keep their beneficiaries updated when they have financial accounts or jointly owned assets that include a pay-on-death provision or that require you to name beneficiaries in advance.
Some financial accounts and policies, such as life insurance or a 401(k) through your job, require that you name a beneficiary when you sign up for the account. If you have named a beneficiary, the instructions you provided will generally override your will.
That means if you once named someone such as a cousin or one of your kids but you change your mind later after a falling out or a relationship change and you forget to update that paperwork, your cousin or child could still end up with your life insurance proceeds or retirement savings — regardless of what your will says.
To avoid ending up in that situation, it’s a good idea to go through your beneficiary forms annually as well as any time you experience a significant life event, such as a marriage, divorce, birth or adoption of a child. Keeping a list of accounts that have designated beneficiaries can help make that review process faster and easier, and is a good idea as you open new accounts and acquire new assets.
By staying on top of these forms, you can save your loved ones from a lot of problems after you are gone and can ensure your assets go exactly where you want them to.
2. Making arrangements for your pets
Planning for the care of your pets is another key area that’s often overlooked. It’s a sad reality that every year, millions of animals enter shelters, and according to the National Kitten Coalition, roughly 2.7 million are euthanized. While no pet owner wants to imagine their animal ending up in a shelter, much less being put down, that can very well happen if there’s no clear plan in place.
Fortunately, you can make sure this doesn’t happen to your beloved animal companions. You can name a caretaker for your pets in your estate plan—someone you trust who is willing and able to take in your animals and provide them a good home. Of course, you’ll want to talk to your chosen pet guardian to make sure they are on board, so you don’t make plans and then end up having your animal end up in a shelter anyway.
If you can afford it, it’s also a good idea to set aside some funds for your pet’s care. Vet bills can add up fast, and by leaving even behind some money that’s earmarked for your animal’s expenses, you can relieve the financial pressure on whomever you have chosen for your pet’s guardian.
3. Considering the particular needs of your beneficiaries
When you create your plans, you also need to think about the specific needs of the heirs and beneficiaries you’re leaving your assets to.
For example, if you’re leaving money or property to someone who relies on means-tested government benefits like Medicaid or SSI giving them a large inheritance could actually cause more harm than good by jeopardizing their eligibility for those programs.
Fortunately, there are options out there such as special needs trusts or supplemental needs trusts come in. These tools let you provide financial support to your loved one in a way without interfering with the benefits they’re receiving.
4. Planning for the possibility of incapacity
When you are making your estate plan, you absolutely don’t want to make the mistake of thinking only about what happens after you are gone without considering what happens if you become incapacitated and can no longer care for your property or make your own medical decisions.
If you haven’t created an incapacity plan, your family may end up having to go to court to get someone appointed as your guardian. This process can be expensive, time-consuming, and stressful.
To avoid this, you should include incapacity planning in your estate plan by using tools such as a durable power of attorney or a living trust. This way, someone you trust will have the authority to manage your affairs if you’re no longer able to do so yourself.
5. Planning for long-term care
Long-term care is extremely expensive, and without proper planning, paying for nursing home or home care can quickly drain your savings. Unfortunately, many people end up forgetting to address this issue as they make their estate plan.
The good news is there are strategies available to get care while keeping your money and property safe. Working with an attorney who understands Medicaid planning can help you protect assets and potentially qualify for benefits when the time comes. You can also look into long-term care insurance as a way to offset potential costs down the road.
Making sure that you include these five steps in your estate planning process can go a long way towards ensuring you have the legacy you deserve and your loved ones have the easiest possible time after you are gone.
Krueger Hernandez & Thompson can help you to avoid these errors. Give us a call today at 608-824-9540 or contact us online to schedule your consultation with a Middleton estate planning lawyer and find out how we can help you.
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