I know, estate planning certainly isn’t one of the sexiest ways to spend your day. The idea of planning how you’d like to die and whom you’ll leave your assets with can be quite – quite frankly, overwhelming. Estate planning is one of those things that many people know they should do, but often never get around to actually doing. It may not be an especially fun topic to spend time thinking about, but it is a very big deal. It’s your opportunity to secure your legacy – and the future of your children, grandchildren, and/or other loved ones.
But look at the late rockstar – Prince, for example… Prince sang a song called “Money Don’t Matter 2 Night,” but it’s clear that the $200 million dollar estate he left behind did matter a lot. As you may know, Prince died without any proper estate planning, including no will. His family and loved ones to this day (two years later) are still entangled with the painstaking process of probate proceedings. When all is said and done, most of Prince’s estate will have probably have gone to the tax man and lawyers instead of loved ones whom he would have liked to provide for. Do you think that this is what he wanted? Probably not.
Prince was known to be very generous in his support and mentorship of new artists, and I’m sure that looking back, he would rather have had most of his estate go to people and causes he cared about, not the tax man.
Now, most of us are not as wealthy as Prince was, but nevertheless there’s a great lesson that can be learned from Prince’s careless estate planning. No matter what your wealth meter reads, you too should plan properly. Having an estate plan – that is, having these conversations with those who will be part of your plan — is essential.
So, here are 11 of the biggest estate planning mistakes, and how to avoid them going forward…
Mistake # 1 – Thinking You’re Too Young to Need a Will. So, you’re in your 40’s, 50’s, or even 60’s, fit as a fiddle and far too busy at your job to worry about something as dry as your estate plan – right? Think again. As Mindi Woodruff explains in “Common Estate Planning Mistakes To Avoid,” her excellent Businessinsider.com article, “you may not have many physical assets to your name yet, but a lot goes into estate planning besides deciding which of your siblings get first dibs on your ITunes library or vintage record collection. If you wind up in the hospital, incapacitated, and can’t communicate, you’ll wish you had designated a Power of Attorney to decide on treatment or at least written down somewhere how you’d like to be cared for at the end of your life. You don’t want to leave your family in a situation where they are unaware of what your wishes are, or who you would like to entrust with the job of making such important decisions…”
Mistake # 2 – Leaving Too Much Cash to the Wrong People. Woodruff also adds, “…We’d all love to dump a pile of cash on our loved ones’ laps after we pass away, but in some cases that’s the worst possible way to leave a legacy. The key is to dole out money in a way that will improve their lives for the long-run. Using a trust fund can be a smart way to leave money to relatives, since it is administered by a trustee who must dole out the cash exactly how and when you tell them to.”
Mistake # 3 – Failure to Communicate. Woodruff also adds, “…Your life is not a Hollywood film. The idea that your family will pile into your attorney’s office an hour after your funeral for the dramatic unveiling of your will is far from normal — or wise.”