No one likes to contemplate the end of life. Even if someone is nearing the end of their life, it can still come as a shock for family members. Adding to that shock may be the stress of dealing with the legal and financial mess left behind.
This is especially true when a loved one required emergency medical care before passing. Families can spend years questioning whether they made the right decisions when it came to life-saving techniques or emergency care.
To save your family from heartache, avoid these common estate planning mistakes.
Mistake 1: You don't have an estate plan.
According to a recent study by Wells Fargo, only 40 percent of adults over age 50 have an estate plan. That means 60 percent of middle-aged adults don't know what will happen to them or their finances should the unthinkable happen.
If you were struck by a car tomorrow and had to be put into a medically-induced coma, for example, who would:
- Pay your bills?
- Run your business?
- Make critical decisions about your health care?
- Make the decision whether to prolong your life?
- Make sure your assets are fairly distributed if you passed away?
These are the details a thorough estate plan will take care of. While every plan will be unique, good estate plans usually include a will, a medical power of attorney (also known as an advanced health care directive), a durable financial power of attorney and perhaps a well-funded trust or multiple trusts.
Mistake 2: Your estate plan is out of date.
Most people think of estate planning as a "set it and forget it" affair. However, life rarely remains stagnant. You could receive an unexpected inheritance or win the lottery. You could get married, divorced or remarried. Your business could boom or bust.
All of these life-changing scenarios should initiate a review and possible update of your estate plan. With divorce or remarriage, for example, you may want to re-designate a power of attorney, trustee or beneficiaries. If you neglect to make changes, you could end up giving away control of your health or assets to people you no longer associate with.
Mistake 3: You haven't discussed your estate plan with your loved ones.
It's natural to think of estate planning as a personal affair. In fact, over 72 percent of people in Wells Fargo's study indicated that such financial matters should be kept private.
That said, you don't want sudden mental decline or a freak accident to be the first time your health care or financial representative hears they are now in charge. You would also want them to know what your wishes are in that situation and act accordingly.
The time to have those conversations is now, before they are needed. That way your representatives will have full confidence in their decisions because they know what you would want to have happen. Even just talking about these issues now, while both of you are of sound mind, can make a chaotic time less overwhelming. While it may be difficult to discuss these things with your adult children or other representatives, doing so now will ultimately protect your wishes and your legacy.