Estate planning is essential in ensuring your loved ones are provided for when you pass away, and someone will handle your financial affairs if you are incapacitated.
It’s easy to make mistakes when creating your estate plan, especially if you’re unfamiliar with the process. Here are three common mistakes people make and how to avoid them.
1. Thinking that a will is the only thing you need
A complete estate plan isn’t just about what happens if you pass away. It also involves preparing for the unexpected, such as being unable to communicate because of an injury or illness. This can leave your loved ones in a challenging position. They will need to determine what you may or may not want regarding medical interventions. In order to take care of your financial affairs, a family member will need to petition the court for a guardian or conservator to be appointed.
This can be avoided by including a power of attorney (POA), which allows someone to manage your finances. The healthcare proxy appoints someone to make medical decisions on your behalf.
2. Not keeping your estate plan updated
Life is like a flowing river, which is constantly moving and changing. We go through many significant life events, including marriage, divorce, births and deaths. If your estate plan isn’t updated to reflect those changes, it may no longer reflect your wishes, such as your assets going to an ex-spouse.
Review your estate plan after major life events or every three to five years. Even if nothing changes in your life, estate and tax laws are constantly changing, possibly impacting your plan.
3. The DIY approach
Many online tools and templates are available, so you may be tempted to try and save time and money by doing your own estate plan. Even if the website claims to provide state-specific templates, there is still a risk of missing critical legal criteria or creating documents that don’t protect your assets fully. Minor errors in wording can render a will invalid, or you may forget to include essential components that leave your family unprepared.
You can avoid the DIY pitfalls by working with someone who can ensure your documents comply with Virginia’s laws. They will also tailor your estate plan to meet your specific needs and goals.