You’re in your 50s, so you’re thinking about estate planning. You have a few children, a good amount in assets – investments, cash, real estate and much more – and you want to make sure they get passed on to your kids properly. But you haven’t done anything yet. If someone asked you if having a plan was important, you’d say yes. If they asked to see your plan, though, it’d be impossible – since that plan simply doesn’t exist.
If so, you should know many Americans are in the same boat. One study found that just 56 percent have a living trust or a will, and a mere 40 percent have made updates to their estate plans recently. A full 27 percent of those who don’t have a will at all are parents, just like you, with heirs who have no idea how assets will change hands. This is a precarious position.
Since you can now see that it’s time to get an estate plan in place, here are three critical mistakes you need to avoid:
1. Assuming siblings will get along
Parents always want to assume their children are wonderful. They see them through rose-colored glasses. When designing the plan, try to make it specific enough that there won’t be any disputes. Don’t assume your kids are going to get along as well as you hope they will. A vague estate plan – like a will telling the kids to divide the assets up as they see fit – can start arguments and drive a wedge between the kids. It can even bring up old sibling rivalries.
2. Forgetting to make updates
Remember the stat from above, about 60 percent of people not updating their wills? That was just for the past five years. You may need to make more frequent updates than that. Don’t fall into that 60 percent. Remember that any life changes can alter your assets or your situation.
Maybe you sold the vacation home that you left to your son, accidentally making it so his share is vastly less than his siblings’. Maybe you got divorced or remarried. Maybe a life insurance plan you used to carry is no longer active. Maybe you cashed out some of your investments for retirement. The list of possibilities is endless, and you always need to make sure your estate plan is up to date.
3. Being influenced by others
It’s wise to talk to your kids when making your estate plan. Getting to know what they want and don’t want helps you create a plan they’ll like, that won’t pit them against each other in court. However, you don’t want to be manipulated by your kids. Your estate plan is something you need to decide on your own. If one child influences you to change the will to suit him or her, your other heirs may end up arguing that it was undue influence, and then the whole thing could be headed to court.
Start thinking about your estate plan today. Consider just what would happen if you passed away unexpectedly and what you would want to happen. Then begin looking into your legal options to get that plan in place.