Before we get into our list of common mistakes, we want to say that the number one mistake people make—and the worst offender in terms of consequences—is not having an Estate Plan at all. When you die in Texas or Arkansas without leaving behind legal documents that distribute your assets and provide instructions for your survivors, you place an additional burden on family members who are already weighed down by grief. The fact that you are reading this article is a good indication that you want to protect your family from the fallout of not planning ahead. That’s a great first step—congratulations! The next step is to make sure you don’t make any of the other mistakes people in Texas and Arkansas commonly make.
What Is an Estate Plan?
The term Estate Plan sometimes throws people off. No, you don’t have to be rich or own a literal estate to make one. An Estate Plan is just what we call the entire collection of documents and instructions that tell people what to do in case you become incapacitated and can’t make decisions for yourself and upon your death. A typical Estate Plan consists of the following:
- A Last Will and Testament. This is a fairly basic document that is at the core of your Estate Plan. In it, you will name a person to take care of the details after your death, and you will specify who you want to inherit which of your assets and possessions. If you die without a Will, the state will make decisions on your behalf.
- Trusts. Not everyone needs a Revocable Living Trust, but it is a valuable Estate Planning tool if you have considerable assets, including retirement funds.
- Powers of Attorney. These documents appoint a trusted person to make healthcare and financial decisions on your behalf if you are unable to due to incapacitation.
- Beneficiary designations. Every one of your insurance policies or investment accounts that allows for beneficiary designations should have them, and they should be reviewed and updated on a regular basis.
- Guardianship designations. If you have minor children or are the legal guardian for an adult, your Will should name guardians to take your place upon your death.
How Do You Make an Estate Plan?
If you Google Will or Power of Attorney, you will come across free or low-cost downloadable documents that claim to be all you need to protect your assets and your family. If you download and print one of these forms, you will see that it is a simple fill-in-the-blank that requires your signature and the signature of a witness or two. It is temptingly easy, but is it legally valid? That is, of course, the big question. Is the way it’s worded and the process it requires recognized in your state of residence? Who can legally serve as a witness? What do you do with it once it’s filled out and signed? Who will ever even know it exists if you were to die suddenly? These are all important questions to get answers to before assuming you have a valid Will because you downloaded one from the internet.
Instead, we highly recommend working with an Estate Planning attorney in your state. They will most likely provide you with a questionnaire to fill out and then meet with you to catalog your assets and help you determine where you want them to go when you die. They will also help you execute the other important documents that are part of a comprehensive Estate Plan. If you have a simple estate, the process will be fairly simple and straightforward. A reputable law firm will never try to talk you into more than you need and will work hard to make the process as affordable as possible. If you have a large estate and considerable assets, you will certainly want a skilled Estate Planning attorney to help you protect what you have worked so hard to accumulate.
What Other Mistakes Should I Avoid?
Now that you understand what an Estate Plan is and you know how to go about creating one, you should be aware of the common mistakes people often make with their Estate Plans. Often, these mistakes happen because people don’t follow through after meeting with an attorney. You will have to be proactive about completing some of these steps, even when you are working with a trustworthy law firm.
Mistakes to Avoid When Creating an Estate Plan:
- Skipping important documents. An Estate Plan should not just plan for your eventual death but should also take care of issues that will arise if you become incapacitated. For this, you need valid Power of Attorney documents, a HIPAA release, a Living Will, and more.
- Not funding Trusts. Your attorney will execute the documents to create a Revocable Living Trust, but you need to follow through by retitling your assets in the name of the Trust. Otherwise, it is a useless piece of paper.
- Not talking to loved ones. If you want the terms of your Will to be executed smoothly and with little family dissension, it is vital that you talk to the people who will be affected by it. Ask prospective guardians, executors, and Powers of Attorney if they are willing and able to take on the task. Let your family members know how you plan to disburse your estate so that there are no surprises later on.
- Naming only one beneficiary or agent. Wherever you name a beneficiary or agent, you should also name a backup. Life is full of uncertainty, and if the beneficiary you named predeceases you, those funds will be in limbo until the court decides who should inherit.
- Not reviewing the plan. An Estate Plan should be reviewed with your attorney every three to five years. Not doing so could mean that the terms of the plan will be outdated when you die. Have your children grown up? Did you get divorced? Have you accumulated or lost assets over time? All of these events—and many others—warrant an updated Estate Plan.
- Forgetting about final arrangements. Leaving written instructions in your Estate Plan for how you want your life to be celebrated can alleviate a lot of stress for your loved ones. This can be in the form of a letter that is kept with your other legal documents.
- Forgetting about digital assets. This is a fairly new area of Estate Planning, but it is becoming increasingly important. Everyone has an online presence, and it’s important to leave passwords and instructions for managing your email accounts, social media accounts, online banking accounts, and more.
A quality Estate Plan should be tailored to your unique wants and needs. Your Estate Planning attorney can make sure you avoid these mistakes and any others that might arise in your specific situation.
Do You Need an Estate Plan in Texarkana, TX?
If you are looking for someone to answer your questions and help you create a comprehensive Estate Plan in Texas or Arkansas, you need to speak with an experienced Estate Planning attorney as soon as possible. Contact us online or call our Texarkana office directly at 903.223.5653. We also have offices in Tyler, Paris, Longview as well as Magnolia, Arkansas.