Estate planning is a task that most people don’t relish and frequently postpone. Sometimes this is due to an unwillingness to confront the prospect of death and sometimes it is due to the distress that contemplating family arrangements after your death brings. Often it’s just procrastination. Whatever the reason, this article sets out some of the most common mistakes that people make in Estate Planning. They are not offered in any particular order or hierarchy of importance but they are offered to assist you in making good decisions about the management of your estate in the manner that you intend.

Not having an estate plan

Don’t put off your estate planning because you haven’t yet devised the “perfect” solution to be set out in your Will and other estate planning documents. Get a basic estate plan in place even in you later intend to make changes to it. Updating an estate plan is a lot less difficult and a lot less expensive then dying without an estate plan.

Nominating too many executors

The person you entrust to oversee the operation of your Will after you die is known as your executor. You are able to nominate a number of executors and people often do on the basis that they don’t want to be seen to be excluding one or more children from the estate administration process. The danger of doing this, however, is that it can add substantially to the work needed to administer the estate and the time that it takes to do so. This ultimately translates into increased costs which the estate has to bear. This leads into the next common mistake which is…

Not engaging with family about the proposed estate planning arrangements

Of course, not every family will lend itself to a productive discussion about proposed estate planning arrangements but, where it is possible , it should be done because it makes it clear what your expectations are and deals with questions that family may have about how the estate is to be administered. Obviously those questions can’t be answered after your passing and unresolved questions like these can lead to conflict. It’s also a good opportunity to explain why, if you have not appointed every relevant family member as an executor, you have not done so.

Not dealing with funeral arrangements

A family discussion is also a good time to deal with these arrangements which can also be included in your Will. A family will be grieving after your death and uncertainty about preferred funeral and burial or cremation arrangements may give rise to disputes which can easily be avoided. If you decide to put your preferred arrangements into your Will you should make sure that the family is aware of them before you pass as sometimes the Will is not seen for a considerable time after the funeral and related arrangements have been concluded.

Trying to control the use of assets after your death

There are instances where it is appropriate to provide directions and conditions attached to gifts in your Will but such circumstances are usually the exception rather than the rule. Discuss with your family your intentions and, equally importantly, their expectations because you may find that what you intend them to do with their lives differs from their own ambitions.

Being too detailed

It may sound strange to caution against being too detailed regarding your estate planning but the danger of itemizing individual assets and gifting them to different beneficiaries is the risk that, if the assets don’t exist at the time of your death, a principle known as ademption will apply to cause the gift to fail. For example, if you gave a gift of “my holiday home at 78 Ocean Street, Mollymook to my daughter, Janet Wilson” and the holiday home has been sold by the time of your death the gift to Janet will fail. There are times when it is appropriate to specifically itemize gifts particularly when gifts of art work and treasured antiques are to be made, but, again, these are exceptions.

This leads on to the next example which is…

Not revisiting your estate planning sufficiently frequently

It is tempting to put out of mind your estate planning arrangements once you have documented them but, just as family circumstances are almost always changing so should your consideration of your estate planning remain active. Anytime a major event occurs in your family (either in relation to disposal of significant assets such as the sale of a home and purchase of different property or life events such as births deaths and marriages taking place within the family) the estate planning should be viewed again to see if changes ought to be made. If this is done then the danger of specifically gifted assets being lost because of the rule of ademption is minimized.

Not having an estate plan concerning your affairs while you are still alive

Of course, estate planning is not just a Will dealing with your assets after your death. It needs to contemplate an Enduring Power of Attorney which would allow trusted appointees to deal with either all or specified financial transactions for you if you become unable to administer your own affairs and an Enduring Guardianship Appointment which confers similar powers on appointees to deal with matters such as medical treatment and life style and accommodation issues.

Of course, the above doesn’t represent an exhaustive list of common mistakes made in estate planning but it does represent a brief summary of the most commonly encountered mistakes.

For any assistance in relation to estate planning and estates, please contact (02) 9525 8688 or info@wmdlaw.com.au