COMMON LEGACY PLANNING MISTAKES
Legacy planning is an important part of retirement planning and has some tricky aspects. Fortunately, many are easy to avoid once you know what to look for.
Creating a Legacy Plan isn’t just a task; it’s part art. Imagine dedicating your time to protect your loved ones, only to make mistakes that cause
stress and complications.
The goal is to create a smooth path for those you leave behind, not a complex puzzle.
Whether you’re drafting your first plan or revising an existing one, now is the perfect time to explore common pitfalls. Understanding these risks helps you craft a plan that mirrors your vision while protecting the legacy you want to leave.
Here are thirteen common legacy planning mistakes and how to avoid them.
1. Failing to Plan
One of the biggest mistakes is not planning. Delaying puts your estate, legacy, and loved
ones at risk.
The Fix: If you haven’t started, or it’s been more than five years since your last update, start now.
2. Not Discussing with Family
While exceptions exist, it’s usually a good idea to discuss your Legacy Plan with family. This can reduce conflict after your passing. If a discussion isn’t possible, include language to penalize anyone who contests the plan.
The Fix: Work with an attorney to discuss your plan with your spouse and anyone named as an executor or trustee. Notify those included in your will to avoid surprises.
3. Naming Only One Beneficiary
It’s crucial to name more than one beneficiary. If your primary beneficiary passes away before you, a contingent beneficiary ensures proper distribution of assets.
The Fix: For each asset, list a primary and contingent beneficiary.
4. Forgetting to Assign Power of Attorney
or Healthcare Representatives
or Healthcare Representatives Naming a Power of Attorney or Healthcare Proxy is critical. These individuals will make decisions for you if you’re incapacitated.
The Fix: If your Living Will doesn’t include these roles, consult an attorney to draft the necessary documents.
5. Neglecting Final Arrangements
Preplanning your funeral or burial can ease stress for loved ones. Additionally, it’s important to clarify your wishes for end-of-life care, such as
hospice or assisted living.
The Fix: Document your preferences for funeral or burial arrangements in your Legacy Plan. This ensures your final wishes are honored and reduces stress for your family.
6. Overlooking Digital Assets
Today, digital assets like social media and online banking must be addressed. A Digital Legacy Plan outlines how these accounts will be handled after your passing.
The Fix: Include a Digital Legacy Plan in your overall strategy. Name a Digital Executor to manage your digital assets.
7. Forgetting Charitable Contributions
Even without vast wealth, you can allocate part of your estate to charity, especially if it’s something important to you.
The Fix: Include gifts to charities in your Legacy Plan or name a charity as a beneficiary of certain assets.
8. Neglecting to Plan for Children’s Futures
The way you structure your Legacy Plan can impact your children. It’s crucial to leave specific instructions for how assets should be managed, especially for minors.
The Fix: Leave instructions for how inheritances should be passed to minors. Work with an attorney to ensure any restrictions are carefully worded.
9. Being Too Specific
While specificity is essential, being overly detailed can create issues. You might list assets you no longer own, leading to confusion.
The Fix: Review your plan every three to five years or after major life events to ensure it remains accurate.
10. Failing to Fund Your Trust
A trust is only effective if it’s properly funded. Many people create trusts but fail to fund them correctly.
The Fix: Work with an attorney to ensure your trust is properly funded, including titling assets and handling personal property.
11. Overlooking Tax Implications
Estate tax liability can reduce what’s left for beneficiaries. Consider both federal and state taxes.
The Fix: While federal estate taxes may not apply to smaller estates, consult an attorney and tax professional to plan accordingly.
12. Misplacing Your Legacy Plan
A well-crafted Legacy Plan is useless if it can’t be found. Avoid putting it in a safety deposit box, which may be difficult for your loved ones to access.
The Fix: Store your plan in a fireproof safe and share its location with a trusted family member.
13. Updating Your Plan Too Infrequently
Legacy planning isn’t a one-time event. Regular updates are needed to reflect changes in your life, such as marriage, divorce, or a birth.
The Fix: Review your plan every three to five years or after major life events to ensure it stays current.
The Wootton Financial Group Difference
At Wootton Financial Group, we take a fiduciary approach to retiring CLEAR.
Investment advisory services offered through Game Plan Advisors, Inc (GPA, Inc.), a [“SEC”] registered investment adviser.
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