With new Inheritance Tax (IHT) rules having been announced as part of the Government’s summer Budget, estate planning and the way in which assets are managed are in the news once again. IHT should be a prime consideration when planning how your estate is distributed and the recent rule changes are likely to lead to a number of people re-thinking their Wills should their estates be effected.
We recently came across an interesting article from the US regarding estate planning tips and some of the top mistakes people make when planning for their death. The Centre on Wealth and Philanthropy in Boston have found that only 40% of those questioned in a survey had updated their Will in the last five years and 52% of children or direct beneficiaries were unaware as to where these Wills were kept. A further 58% weren’t sure what the Wills entail, either.
As Wills and estate planning documents can often be contentious, it is best to try to ensure that all parties that are involved are kept in the loop so that they know where important documents are kept and what the content entails. Here are just some of the most common mistakes made by those drafting or updating a Will:
1. Failing to consider sibling rivalry
Regardless of whether siblings (and other close family members or beneficiaries) got on well or not when a parent was alive, the death of a mother or father can lead the rivalries emerging. In order to try to reduce the chances of any disputes, it is best to hold conversations with all of the beneficiaries before finalising a Will so that everyone knows where they stand and any potential issues can be ironed out well in advance.
2. Forgetting important life changes
It is all too common to see that a Will has not been updated on a regular basis which sometimes means that people forget to incorporate a new marriage, divorce, child or grandchild. This means that sometimes estates are not distributed as the deceased may have wished simply because of a basic administrative oversight. Wills should always be reviewed as a matter of course (many willwriters suggest every five years) but if a major life change occurs then Wills should also reflect these changes as soon as possible.
3. Appointing co-trustees
This may seem like a good idea for some people, but if a co-trustee lacks the time and attention to detail to make a real difference to a Will and the Will writing process, then they could be more of a hindrance than a help. Sometimes creating a Will is best undertaken as a solitary and personal task.
Are there any other potential issues that you can you think of to avoid when estate planning?