Only 42% of U.S. adults currently have estate planning documents such as a will or a living trust. Without these documents, your family’s future is essentially up in the air. 
“Whether it’s a super basic plan like drafting a will or putting powers of attorney in place all the way up to complex trusts et cetera, they’re really important,” said Michele Francisco, partner and senior relationship manager at RMB Capital. “Because… regardless of your wealth, you want to have a voice in the decisions made on your behalf.”
Thankfully, National Estate Planning Awareness Week is wrapping up. From October 15 to October 21, the National Association of Estate Planners and Councils (NAEPC) is putting on the 10th annual National Estate Planning Awareness Week to help the public understand what estate planning is and why it’s such a vital component of financial responsibility.
The top three reasons people engage in estate planning are to: avoid probate (59%), minimize discord among beneficiaries (57%), and prevent children from mismanaging their inheritances (39%). Though Americans in their 50s, 60s, and 70s certainly need to draw up a will and set up their estate plans if they have not done so, younger Americans can benefit from focusing more on their financial future, as well. Roughly 78% of millennials (between the ages of 18 and 36 years old) do not have a will. Approximately 29% of those without a will said that it’s because they “don’t have enough assets to leave anyone.” That’s a common misconception, however, and shining a light on the importance of estate planning during a national awareness week can help clear up some of those issues for millennials and elder Americans alike.
Here are some common estate planning mistakes that you should avoid at all costs:
- Not naming a contingent beneficiary — Perhaps the most common estate planning mistake is not naming a beneficiary. If no contingent beneficiary is selected, there will be no stretch individual retirement account (IRA), which is a valuable tax break that enables someone who inherits an IRA to draw out distributions over his or her own life expectancy — if the original beneficiary has died.
- Not updating your estate planning documents — If you go through a divorce, lose a beneficiary, or any other major life-changing event, it’s important to update your documents as soon as possible. These situations can be extremely difficult, but you’ll feel much better if you stay on top of your estate planning and keep everything updated.
- Not having a trust in addition to a will if your estate — “[People] hear trust and they think, ‘I need to have lots and lots of money,'” added Francisco. “But you technically don’t. It’s a much more private and seamless administration of things after you pass.”It’s important to note, however, that if you do have “lots and lots of money,” you certainly do need a trust. If your assets are in the six-figure range or higher, it’s recommended to have a trust in addition to a will in order to help minimize estate taxes and avoid probate.
Additionally, you’re going to need all the correct documents in order to successfully set up your future estate plans. Here are some of the essential documents you’ll need throughout the estate planning process:
- Durable power of attorney (DPOA)
- Advanced medical directives
- Will
- Living trust
- Letter of instruction
The NAEPC’s goal is to work with affiliated local councils throughout National Estate Planning Awareness Week each year to assist and spread the importance of future finical and estate planning to every American citizen.
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