In a nutshell, an estate plan ensures that your assets are distributed according to your wishes following your death. But there’s really so much more to it than that; a strong estate plan provides instructions to your loved ones about things like what to do with any debt you leave behind and how to proceed with funeral arrangements. For parents of minor children, it’s an opportunity to identify a guardian for their children should both parents pass away.
A good estate plan not only provides peace of mind for the person creating it, but it’s also a tremendous blessing to those grieving the loss of a loved one. An estate plan ensures no one will have to guess about what you would have wanted, which also helps avoid fighting among family members.
Whether you’re drafting your first estate plan or revising one you established a decade ago, you’ll want to avoid these common mistakes.
Mistake #1: Thinking you’re too young for a will.
Unless you’re under the age of 18, you’re not too young for a will. If you are 18 years of age or older and die without a will, you are said to have died intestate and Colorado law will determine what happens to your property. This can make what is already a very difficult time for your loved ones even more difficult as they try to determine what you would have wanted, especially if you are married, divorced, remarried and/or have children.
Also consider what would happen in a situation where you become incapacitated and could not make your own medical decisions; who would do so and how would they know what you would want? By completing an advance directive, or living will, which is one part of an estate plan, you can directly answer those questions so that your wishes would be carried out if you were severely sick or injured.
Mistake #2: Never revisiting or updating your plan.
An estate plan is not a once-and-done project. Especially if you avoid mistake No. 1 and get started when you’re young. An estate plan should be treated as a living, breathing bundle of documents that needs to grow and evolve as your life does. It’s important to review and revise your plan on a regular basis, in tandem with major life events like the birth of a child, the death of a loved one, marriage, divorce or remarriage, especially if it means creating a blended family, and even before less major life events like going on vacation.
Mistake #3: Failing to talk about your wishes with your loved ones.
Taking the time to inform your loved ones about what you’ve documented in your will and even explaining why you made the decisions you did can help clear up confusion and possibly avoid any conflict or fighting among family members.
Also, if you’ve named a guardian for any minor children and/or appointed powers of attorney, it’s important to talk to those people about the appointment, explain why you chose them and confirm that they’re up for the job.
Mistake #4: Relying on a holographic will.
A holographic will is one that is handwritten and signed solely by the testator (a testator is the person who created the will). Typically, in Colorado a last will and testament must be signed by the testator and two “uninterested parties,” and notarized. However, Colorado is one of 26 states where a holographic will is considered valid, but that doesn’t mean you should rely on one to ensure your wishes are carried out after your death.
Holographic wills often use improper terminology and ambiguous language, which leaves them more vulnerable to being contested by family members and long, pricy ordeals in probate court.
Mistake #5: Failing to name a conservator for minor children.
Minor children cannot legally own or manage property. Thus, when a minor receives an inheritance, an adult is appointed to control the inheritance until the minor turns 21. The legal term for the adult who fills this role is conservator. Often this role is filled by the child’s guardian, but that’s not always the case, nor is it a requirement. You can identify who you would like to serve in this role in your will; if you don’t the court will decide for you.
Learn more about the role of conservator here.
Mistake #6: Creating a will when you really need a trust.
A will is perfectly effective for those whose estate is simple and straightforward, but for those whose estate is more complicated by things like debt and multiple out of state properties or valued over $5 million, then a trust is usually a better option or, ideally, both a will and a trust.
Further, for those for whom privacy is a top concern, a trust offers more protection than a will because, unlike a will, a trust does not have to go through probate court (a will becomes public record when it goes through probate). Avoiding probate usually also means a reduction stress, conflict and expenses for surviving family members.
Additionally, under Colorado law when a child turns 21, he/she inherits any assets or property left to him/her in their entirety. Many parents are uncomfortable with the thought of a person so young inheriting a significant amount of money, but the only way to avoid this is to create a trust, which allows you to dictate exactly when and under what terms a child receives an inheritance.
An estate planning attorney can help you determine which tool is best for you.
Read our post “Will or Trust: What’s the right choice?” to learn more about this topic.
Mistake #7: Failing to develop contingency plans.
Even if you intend to be diligent about reviewing and updating your estate plan on a regular basis, it’s wise to also build contingency plans (i.e., name secondary, even tertiary beneficiaries) into your will and other documents. Doing so ensures that in a situation where, for example, your primary beneficiary dies before you and you become incapacitated in a way that makes you unable to update your will or otherwise make decisions about your estate, both the court and your loved ones know how to proceed.
Mistake #8: Not working with an attorney.
With various forms and software programs available online that promise quick and easy wills, advance directives and more, it’s true that you could create an estate plan and never even consult with an attorney. But the documents in an estate plan are hardly one-size-fits-all and only an experienced estate planning attorney, like those at Robinson & Henry, can help you identify which tools are the best for your situation and circumstances and help you create an estate plan that most effectively protects your legacy and loved ones.
Michael Hanchett is Robinson & Henry’s lead estate planning attorney. He helps individuals and business owners plan for the future by drafting powers of attorney, last wills and testaments, trusts and advance directives. Please call 303-688-0944 to schedule a free consultation with Mike.