(This article previously appeared on GOBankingRates.com.)
Many people overlook writing a will until they become parents, launch a business or buy a first home. And even when they do finally craft this important document, estate and financial planning experts say, it is easy to overlook some important details.
GOBankingRates uncovered the five biggest things people overlook when drafting a will. Find out if you’re missing a one of these key elements:
While most wills include at least one primary beneficiary, it is a common mistake to fail to prepare for a backup plan in the event the beneficiary predeceases the testator.
Furthermore, “it is important to consider whether a beneficiary is capable of inheriting the asset and can manage the asset properly,” said Sandra Martin Clark, partner at the law firm of Manning, Fulton & Skinner in Raleigh, N.C.
It is important to consider whether a beneficiary is capable of inheriting the asset and can manage the asset properly.
— Sandra Martin Clark, attorney
Martin Clark says some reasons a loved one should be passed over for beneficiary status include:
- Mental capacity
- Inability to properly manage assets
“Oftentimes, after a will is drafted and signed, the document is never looked at again until someone has passed away. At that point, it is too late to correct any error or consider a more appropriate planning opportunity,” said Martin Clark.
If the testator’s intent is unclear, or the beneficiary is a minor or found to be incompetent, it can be overwhelmingly difficult and costly to find a solution, Martin Clark said.
Provisions for Digital Assets
Digital assets are among the most important things left out of wills today, said Steven J.J. Weisman, an attorney in Amherst, Mass., who is an estate planning professor at Bentley University and author of A Guide to Elder Planning.
Websites, domain names and online accounts can all have economic value. Planners should also include account numbers and passwords within a will.
“So much of what we do is online or on our computers,” said Weisman. “Without the proper user names and passwords, as well as authorizing someone to have access to these matters, the estate can be severely compromised.”
Information for social media accounts can be important. Although there may not be a monetary value associated with a Twitter handle or a Facebook account, it can be awkward for loved ones to see greetings or birthday wishes posted to the deceased’s wall or news feed.
Prearrangements for Pets
Although you cannot leave assets or property directly to a pet, you can — and should — specify a caregiver for your pet, said David Walters, a certified financial planner and portfolio manager with Palisades Hudson Financial Group in Portland, Ore.
Consider naming a secondary caregiver in the event the primary caregiver is unwilling or unable to care for your pet, Walters added. Pet owners can even name a beneficiary for assets earmarked for the care of your pet.
“If you do not make any specific provision for your pet’s care, the arrangements may become a source of contention among your loved ones. In the worst case, your pet could end up in a shelter,” Walters said.
A Personal Property Memorandum
Personal property mementos can be the most prized items in the estate of a parent or loved one.
“Sometimes, what people fight over are the least valuable items,” said Erik Hartstrom, attorney with Estate Plan Pros in Elk Grove, Calif.
Examples include a grandfather clock, Mom’s favorite costume jewelry, or even a $1.50 tchotchke Dad kept lovingly tucked in his dresser drawer.
An estate that has heirlooms worth a substantial amount of money can exacerbate the problem.
When there is no written personal property memorandum affixed to the will, beneficiaries may quarrel and sometimes even fracture long-standing relationships.
“Have a conversation with your beneficiaries and find out what is meaningful to each,” said Hartstrom. “You may be surprised.”
Trustee and Guardian Designations
“This is especially important if both parents or a single parent suddenly passes and there are minors involved,” he said. “The guardians need to be immediately notified to ensure proper care of the children.”
A named trustee and guardian don’t have to be the same person. Without explicit instructions, an unintended new guardian may raise a child, or care for an incapacitated adult. Assets intended for the care of the minor can transfer to someone the deceased did not prefer.
In a worst-case scenario, said Jeyaram, “the children may be put into state custody.”
When you’re ready to put your final wishes on paper, thoroughly consider how you want all aspects of your estate handled — even the seemingly insignificant items. An experienced estate attorney can help you determine all the items you may want to consider when planning your will.
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- What an Executor of an Estate Needs to Do
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