We all experience the death of friends and family members in our life. In financial planning, we often find ourselves involved in the aftermath of those deaths.  The first step to making the aftermath easier for those left behind is creating a will.  However, there are some common mistakes folks make that are easily avoidable.  Before I go any further, l want to make clear that I am not an attorney, and this column is not intended to provide legal advice. These are simply some topics to consider and to discuss with your attorney and other advisors as you craft your estate plan.
The first mistake to avoid with your will is not having one. If you don’t have a will, the state decides who gets what. If you are single, without minor children, and without significant assets, this might be acceptable to you. However, simple wills are fairly inexpensive and easy to create. If you have young children, a will is crucial because the document will name the guardian for them.
Once you have a will, it is important to update it from time to time and especially when you have significant life events. If you get married, divorced, widowed, or have a child, it is important to update your will to reflect those changes. Even if your life doesn’t change much, laws can. Reviewing your will with your attorney will ensure that your will continues to accurately reflect your final wishes.
In your will, you will name a representative to carry out the instructions. Be sure to name someone who is financially savvy and is well organized. They need to be able to work fairly with all your heirs, and also have the time to devote to executing the will.
Avoid naming couples as guardians for your minor children. Couples can split up which will complicate things unnecessarily. Instead, name a single person and an alternate. You may also want to consider naming different people as guardian and as trustee for the money you leave you children. Raising children and managing money are two completely different tasks requiring completely different skills. Appointing separate people for each role will put an important check in place.
Should you decide that you want to disinherit a child, it is important to mention the child by name in the document and to state your explicit intention to disinherit them. You might also consider leaving the disinherited child something of value along with a “no-contest” clause that revokes that bequest if the child challenges the will.
Another mistake to avoid is not contemplating worst-case scenarios. For example, what would happen if a child or a spouse dies at the same time or shortly after you. If you haven’t named alternate heirs, state law will determine who your assets are passed to. It is also important to coordinate your will with other documents, such as life insurance policies, retirement accounts and accounts with a transfer-on-death feature. The beneficiary designation on these assets will supersede your will, so it is important review those documents from time to time as well. Assets held jointly with another person may also be distributed outside of the will, so it is important to review those assets when you create or update your will.
Families will fight over the strangest things, so it is important that you be specific about any belongings that you want to be distributed to a particular person. However, avoid being too specific. Listing all of your assets individually with add to the cost of the will in time and money, and will require you to update it whenever you acquire or dispose of a new asset.
Finally, make sure your heirs know where to find the will. You may not want to tell them what is in the document, and you certainly don’t have to. However, they should know that it exists and where to find it. Give a copy to a third party like your lawyer or financial advisor in case your heirs have trouble locating it.
Mistakes in your will or overall estate plan are easy to avoid and correct while you are living, but the moment you die or become incapacitated, they become written in stone.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
Securities and financial planning offered through LPL Financial, a registered investment advisor.
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