Chances are you know that a comprehensive estate plan is one of the most important aspects of your wealth management plan. It’s also likely that you have drafted a will or trust and have assembled your investment accounts into a handy list that your executor can access easily.
There are more than a few details to remember when outlining your estate plan and what you may forget can cause some confusion down the line as your loved ones sort out your estate. We have created this helpful outline with some common estate planning pitfalls that you should be aware of as you develop a more comprehensive estate plan.
Although you’ll need the services of an attorney to provide legal advice and draft legal documents, your financial advisor plays an integral role ensuring your estate planning wishes are carried out through your estate planning actions.
Overlooking Your Digital Assets
Digital assets are often overlooked, but they shouldn’t be. Nowadays, digital assets hold a tremendous amount of value because technology has infiltrated every aspect of our lives. This means you need to be keenly aware of your digital assets and your digital accounts when developing an estate plan.
What exactly are digital assets, though? We’re glad you asked. Digital assets span the gamut from online photo albums and social media profiles, to reward points and airline miles, to investment and cryptocurrency accounts. All of these accounts hold either financial or sentimental value. You will need to decide what will happen to them after they are no longer useful to you. Remember to keep a list of all of your digital accounts and their passwords, so that your digital executor can access them and distribute them to your loved ones easily.
Forgetting to Update Your Details
Everyone’s heard the anecdote of a retirement account or life insurance policy whose beneficiary was an ex-spouse or a deceased relative, leaving the current spouse or living relatives in a tough spot. But there’s a reason for urban legend: things like this do happen and they happen more often than many people realize.
When your situation or your family situation changes, you may need to update your beneficiaries and review the details of your estate plan with your attorney and your financial advisor, assuming you have one. In fact, it is generally recommended to schedule frequent reviews of your beneficiary designations on all of your accounts and the details in your estate plan every 3–5 years. After all, the idea behind an estate plan is to make sure your wishes are executed and your loved ones are protected in the aftermath.
Not Keeping Organized
You may know where every single account is located and you may also be able to direct someone to all digital assets that hold financial value, but that is not going to help anyone if you are not available. It is important to make sure all your information is organized so that your executor can access all your accounts and information easily.
On that note, it is wise to create an itemized inventory of your home and make a list of all the items you have that hold sentimental or financial value. Talk to your children and grandchildren openly about what they want to take from the home, such as a set of china or an heirloom.
When you have completed the inventory of your physical assets, take a full accounting of all your financial assets, including retirement accounts, life insurance policies, homeowners insurance, disability insurance, and long-term care insurance. You will want to include account numbers and any physical documentation you have.
Once these lists are complete, date and sign them and make copies. Give one to your executor, the second to your spouse, and keep another in a safe place, like a safe deposit box. This is a surefire way to keep your estate organized.
Estate Planning Pitfalls
Several years ago I had the unfortunate experience of helping someone during a time that their spouse became suddenly incapacitated. The incapacitated spouse had taken care of all financial responsibilities in the marriage. Obviously this was a very stressful time for the healthy spouse. But, one problem that caused additional stress was that the incapacitated spouse had not executed a Power of Attorney. Therefore we had a very difficult time obtaining financial information and the healthy spouse was burdened with additional stress. Although every person and couples’ situation is unique, we think consulting with an attorney about initiating a Power of Attorney is a wise step toward planning for the unexpected.
Another estate planning pitfall that quickly comes to mind is people adding a joint tenant to their deposit or non-qualified investment accounts. Many older people consider or do this as a way to protect against incapacity, but it can come with unintended consequences. We highly recommend consulting with an attorney or trusted financial professional prior to making this type of decision.
Overwhelmed? We Can Help
Your estate plan should be detailed and thorough, but we know that can be a daunting task. We at Pathway Financial Planning are here to make your estate planning a breeze. To schedule a consultation, call us at 765-698-5121 or email us at firstname.lastname@example.org.
Ben Harvey is president and senior financial planner at Pathway Financial Planning, Inc., an independent, comprehensive financial planning firm that prioritizes the client, each and every time. He is recognized as a Retirement Income Certified Professional (RICP®) by The American College of Financial Services.
Ben spends his days staying on top of what’s going on in his clients lives, coordinating the financial planning process, helping people identify their goals, and evaluating whether they are on track. He designs and implements customized strategies all as part of the proprietary process, The Path to Purpose FORMula™. Ben has 15 years of experience in the financial industry, including years as a loan officer, trust officer, and financial advisor. His experience in business management, retail lending, financial estate and trust administration and planning, comprehensive financial planning, and wealth management is unique.
Outside of work, Ben enjoys spending time with his wife, Mandy, and their children, Cooper and Claire. They are active in their church, and especially love traveling, hosting friends and family, going to amateur sporting events (especially high school basketball and swimming), and experiencing different cultures. On occasion, you can find Ben playing golf, sometimes in amateur tournaments, which he credits for teaching him patience. He will also tackle the occasional home improvement project, read non-fiction, and watch documentaries. Through experience and “honey-do lists,” Ben has learned to never start a project he’s not ready to finish. To learn more about Ben, connect with him on LinkedIn. You can also register for his recent webinar, Retire with Purpose: An Easy Strategy to Simplify Your Distributions.
Ben Harvey is not an attorney. For legal advice regarding your individual estate planning needs, please contact a qualified estate planning attorney.
Ben Harvey is an investment advisor representative of, and securities are offered through USA Financial Securities. Member FINRA/SIPC. A Registered Investment Advisor located at 6020 E Fulton St. Ada, MI 49301. Pathway Financial Planning is not affiliated with USA Financial Securities.