We all know that having a last will is a way to make certain that your wishes regarding the distribution of your assets are followed. Once you have everything in place, you can breathe easy, right? Before exhaling, take a look at the following common mistakes made in wills. By doing so, you may hopefully avoid some predictable, but entirely preventable, traps.
1. Remember to Update Your Will.
You really meant to get around to updating your will after your divorce, the birth of your child, your big move, the start of your now-blossoming business, but you just have not found the time. Well, the right time is now!
When you have experienced a major life change or change in financial circumstances, such as a move to another state, birth, death, marriage, or the opening of a new enterprise, you must take another look at your last will. Failure to do so could result in unintended bequests and inheritances, and leave your estate in one big mess. Additionally, the importance of naming guardians for your minor children in the event of the death of both natural parents cannot be stressed enough.
2. Remember to Provide for the IRS.
The Internal Revenue Service is surely on your mind at least once a year—probably mid-April. Add another time: When writing your will, you cannot afford to forget about estate taxes, the laws of which are constantly changing. One of the most common mistakes people make when they create Wills is assuming that their estates are not worth enough to come under the estate tax system. The truth is, even though certain property is not in your estate, it may still be taxable. Assets such as life insurance proceeds, trusts, and retirement plans could be included in your estate for tax purposes.
3. Remember to Appoint a Proper Personal Representative.
Your Personal Representative ("PR") will be the one who administers your estate, so choose wisely. If your chosen PR can no longer serve in this capacity for whatever reason (e.g., no longer of sound mind, has moved out of the country), you need to change your will.
4. Remember to Include Intended Beneficiaries.
This mistake may or may not coincide with one's failure to update a last will, but regardless, you should very carefully consider who exactly you want named as a beneficiary in your will. Along this same line of thought, if you are desire to intentionally leave someone out of your will or provide for distribution in an unusual way, it is best to revise your will while your motives are fresh in your mind.
5. Don't Forget to Dispose of Everything.
It is important to carefully consider your assets and include a provision for everything that you wish to distribute to your beneficiaries. It is also a good idea to provide some “what-if” provisions in the event that a named beneficiary cannot inherit as intended (e.g., the beneficiary has died). Some solutions for this include a residuary clause, contingent trust clause, and provisions for alternate beneficiaries.
Do not let these potential pitfalls keep you from writing a last will—for many of us it is the most important document we will ever sign.