5 Common Estate Planning Pitfalls

Estate planning involves more than just writing a will. While wills are important - especially to people in their 30s and 40s with young children to consider - they’re not the only parts of estate planning to take care of.

You don’t have to spend a lot of time and money on your estate planning; in fact, most people are surprised with how quickly and easily they can come up with a comprehensive plan that puts their minds at ease and secures their estates. The key is to cover all of your bases and make sure your estate planning is done correctly.

What can you do to avoid common pitfalls related to estate planning? Find a good financial adviser to walk you through it, and watch your step when it comes to the following issues.

1. Underestimating Your Estate

You’ve been working hard, saving for your super, and paying down your mortgage. It’s a slow, steady process, so it’s easy to overlook the size of your estate. Lots of people make the mistake of thinking that their estate doesn’t warrant an estate plan. But even if your only asset is your super fund, you still need to think about who the beneficiary will be.

You may feel more motivated to tackle your estate planning if you sit down and make a list of all of your assets. Most people are pleasantly surprised to find that their estate is actually much larger than they thought it was. Your financial adviser can help you to make sure you’re not forgetting anything.

2. Procrastinating

“We’ll just have to do it again later if we do it now,” is a common refrain when it comes to estate planning. The sad fact is, though, that some people die before their time. It would be a shame to put your family - especially your children - through a lengthy and difficult court battle for custody and inheritance. 

It’s one of the basic responsibilities of parenthood to provide for your children, and that includes making sure that they’re provided for if anything happens to you before they’re self-sufficient adults.

Even if you don’t have young children to look after, failing to plan your estate could expose your loved ones to unnecessary stress and financial hardship if your estate isn’t properly planned.

3. Ignoring Competency Problems

It’s not pleasant to think about, but Alzheimer’s and other dementia-causing diseases affect about 1 in 10 people over the age of 65. Once these problems set in, it’s nearly impossible to do your estate planning.

Appoint a power of attorney who can make medical and financial decisions for you in the event that you can’t manage them yourself.

4. Failing to Anticipate Family Feuds

Unfortunately, it’s more and more common for people to challenge wills in court. Each Australian state has its own policies regarding estate disputes, so it’s wise to look into the laws in your state and consider how they may affect your family.

When you have a detailed estate plan, your family is much less likely to find themselves in court, even if old family feuds exist. With a specific, detailed plan, there’s just not much room for interpretation or challenge. This could include why one child was excluded from certain assets because of previous parental help or other issues.

5. Forgetting to Update Your Estate Plan

Estate planning isn’t something you can do once and then never revisit again. Life changes, your estate changes, and your wishes may change as well. On a regular basis, maybe every year or two, sit down and review your plan. Consider whether or not the following items need to be updated:

• Life insurance beneficiaries
• Assets held in trust
• Company assets
• Jointly held property
• Superannuation assets and beneficiaries

If you need help creating or reviewing your estate plan, contact us at Altus Financial. Our advisers can help you to avoid estate planning pitfalls.