One of the most common misunderstandings about estate planning is that it’s a one-time event. Many people think that once they’ve created their estate plan, it’s unchangeable. But this misconception can lead to three estate planning problems.
You wait too long to get started.
Thinking of estate planning as permanent can cause you to put off starting the process. You may believe that you should consider all the angles and make all the right decisions the first time. But it’s important to realize that you can change your mind. Don’t let the fear of “getting it perfect the first time” cause you to put off creating a plan at all. Make the best decisions you can today with the knowledge and goals you have now.
You don’t adjust your plan to life changes.
Just because you have signed your documents does not mean that your estate plan is finished. It would be a mistake to consider the estate planning task “done” at that point. Your plan can and should change over time. In fact, maintenance might be the most important part of your estate plan.
Changes to your plan go beyond shifts in income or savings strategies. You may want to add new beneficiaries, like new kids or grandkids. You may also need to change who is listed as your trustee. Your plan should also account for new assets. If you buy or sell a car, for example, you should update your estate plan. And the update should go beyond ownership of the asset. It should also include how and where the asset is titled.
Your plan misses changes to estate planning law and best practices.
Estate planning law can be complicated. For example, laws vary depending on what state you’re living in and where your assets are titled. These laws can change and it’s important that your estate plan considers the most updated rules.
Staying on top of estate planning law and best practices is your attorney’s job, so take advantage of that. Even if you don’t have changes in your financial situation, you should check in with your attorney at least once every two years to make sure that your plan is updated to reflect any new rules and approaches.
How can you get started, you may ask? Change your mindset. Understand that an estate plan can, and should, change over time to keep up with your life and estate planning laws. It doesn’t have to be right the first time.
Next, find an attorney who understands and values the flexibility of your plan. Your attorney should help you revisit and revise your plan through a formal process.
Thinking that your estate plan is set in stone is a common challenge. But once you overcome this hurdle, you can start building a plan that’s consistent with your goals, your finances, the law and ongoing estate planning best practices.