This week’s Tuesday Tip addresses big mistakes people can make with their wills. Please watch the video below to learn more. If you would like a free review of your current financial situation, please use this link to schedule a free call. You can find an edited transcript below the video.
In this week’s Tuesday Tip, I’m going to discuss seven big mistakes people can make with their wills.
1. Procrastination.
The first mistake probably happens the most. We procrastinate or we don’t do it at all. While I know it’s not easy thinking about death, having a will gives you a say about what happens to your assets when you die. You can also have a say in who’s going to get what. For example, you can name your beneficiaries and your favorite charities if you’re charitably inclined and want to use some money in that way.
Also, you don’t want to wait till the last minute, because that raises the risk of challenge from somebody who feels that they were left out or somebody who’s disgruntled.
2. Dropping Large Inheritances in Heirs Laps.
The second of the big mistakes people can make with their wills relates to dropping large inheritances in their heirs’ laps. Children in their early twenties or thirties may not be able to handle such large windfalls. But if you can use a trust that allows those assets to be distributed at certain intervals, your heirs won’t get everything all at once.
Also, you want to think about, especially when you’re older, you may have IRAs and other assets like that. What’s the tax treatment going to be? I talk more about this in my blog, “How Roth Conversions Can Help You, Your Surviving Spouse, and Your Heirs.”
3. Forgetting About Digital Assets.
The third big mistake people can make with their wills is forgetting about digital assets. If you own cryptocurrency, you want to make sure your survivors know how to access your digital wallet, otherwise, that cryptocurrency could be lost.
The same thing applies if you have NFTs. Also, don’t forget about social media accounts. You want to make sure that those can be properly shut down or whatever you want done with them will happen after you’re gone. If people don’t know how to access them, nothing can happen easily.
4. Not Making Regular Updates.
The fourth big mistake people can make with their wills is not making regular updates. Life happens. And circumstances change. This is something that women facing new beginnings often must deal with. If you get divorced, you want to make sure you change your beneficiaries. If you’re a widow, your beneficiaries need to be changed. Plus, as your children get older, you want to make sure or if there’s somebody that’s named in your will and they pass before you do, you want to make sure that those assets are not going to them. That just makes things a lot more complicated.
5. Not Matching Beneficiaries.
The fifth big mistake people can make with their wills not matching beneficiaries mismatching beneficiary designations typically supersede what’s in your will. So you want to make sure that you have properly named your beneficiaries on your financial accounts, because that keeps those assets out of probate, and makes them pass much more easily.
6. Flexibility.
The sixth of the big mistakes people can make with their wills is not allowing for flexibility. Say you have an estate valued at $5 million, and you want $4 million to go to your children and $1 million to go to charity. And now, through some circumstances, the value of your estate is only $3 million. That charity may still get $1 million dollars. If it does, your children are only going to get $2 million. You want to make sure there’s flexibility to allow for those changes and other changes that can happen in your life.
As I mentioned before, what if somebody named in your will is no longer alive? What happens then? You want to make sure that you allow for flexibility in the will and
7. Heading off Conflicts.
The 7th big mistake people can make with their will relates to not heading off conflicts. However, remember that the better job we can do taking care of all these things, the less likely it is that there will be challenges. We want to make sure that people are aware of what’s going on so that we don’t have fights.
Closing Thoughts About Big Mistakes People Can Make With Their Wills
For women facing new beginnings, avoiding big mistakes people can make with their will can be quite impactful. Please click here if you have any questions or would like to discuss any of these concepts in more detail.
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Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.
