17 Costly Mistakes Parents Make About Their Children
Costly Mistake #1: Not planning at all
This is the worst alternative. Your family will have to take everything you own through probate court. Probate is months of emotional torment. Probate is financially very costly. Probate takes 6 to 12 months during which money is tied up. Money that your family needs. A good planner has full set of tools that can avoid probate while not breaking your bank.
Costly Mistake #2: Forgetting your children will bear the burden of no plan
If you do not plan, then your children will bear the full emotional burden and financial strain of the probate process, courts, judges, fees, and costs. Even a simple plan can avoid probate.
Costly Mistake #3: Not nominating temporary guardians
If you were unavailable temporarily, this one thing can keep your children out of the foster care system. You simply pick 1, 2, or 3 people to have full temporary authority if you are unavailable or incapacitated temporarily.
Costly Mistake #4: Not nominating permanent guardians
If you were unable to finish raising your children, you need to make known who you want to take over. It takes about 5 minutes to fill out and sign a simple form to let the courts know your choices.
Costly Mistake #5: Assuming your older children can manage money well
People in their 20’s and even into their 30’s have a difficult time managing large sums of money well. As a parallel, the average amount of time a lump sum accident settlement lasts is 2.5 years. The size of the settlement does not matter, it is gone in 2.5 years. A trust can hold the principal back until whatever age you decide. It is common to give it out in portions at 25, 30, and 35.
Costly Mistake #6: Not keeping your plan up to date
Laws change. Family situations change. Children grow up. The best way to keep everything up to date is to review your plan at every major step in life or at a minimum every 5 years.
Costly Mistake #7: Putting off your planning
Everybody says they can plan tomorrow. Stop procrastinating. Working with a caring planner makes the process virtually painless. You may even find that you are relieved that you have a plan when you get done.
Costly Mistake #8: Doing it yourself
This is a huge mistake. Estate plans are very complex to implement and write the documents. It is easy to make a “simple and innocent” mistake that unravels the whole plan, such as forgetting to sign an affidavit. The best solution is to work with an attorney specialized in estate planning so every i is dotted and t is crossed.
Costly Mistake #9: Not prepaying final arrangements
Your family will have enough to worry about without needing to pick and pay for your final arrangements. You can either purchase pre-paid funeral insurance or work with the facility of your choice and pre-pay the entire ceremony.
Costly Mistake #10: Not detailing final arrangements
Your family has enough to get done without needing to plan all of the details. Do them a big favor and pick everything ahead of time.
Costly Mistake #11: Not sharing your plan with your children and personal representatives
Part of planning is sharing at least minimal information with your children and representatives. They do not need to know the details, but need to be made aware of their roles. One of them should also have access to your lock box, if you have one. Your plan information can be shared in a personal conference or a letter. It is also best to make sure your personal representative wants the job before you give it to them.
Costly Mistake #12: No healthcare directive
There is almost nothing worse than being at the whim of a doctor. Without a healthcare directive, the doctor will treat you in your best interest as the doctor see it, and in the legally prescribed manner. Unless your family goes to court and gets a guardianship. If your family cannot agree, the court battles can go on for years and years. A simple healthcare power of attorney, HIPAA waiver, and living will keep your decisions intact and your family out of court.
Costly Mistake #13: Only a Last Will and Testament
One word. Probate. Most of what you own will have to go through probate. Probate is expensive, time consuming, and emotionally draining. A few other documents like trusts and beneficiary deeds can stop probate.
Costly Mistake #14: No Last Will and Testament
One word. Probate. Most, if not all, of what you own will have to go through probate. Probate in this case will take a minimum of 6 months. Probate is expensive, time consuming, and emotionally draining. Some additional planning will make sure no probate has to happen.
Costly Mistake #15: Assuming your children will never develop bad habits
Parents do not like to think about their children developing a drug, alcohol, or gambling habit. A properly drafted trust can actually cut off or restrict funds if they do develop a bad habit.
Costly Mistake #16: Assuming your children will never have credit issues
Sometimes it happens. Somebody gets laid off and needs to pay for food and shelter. They use credit to do it until they get another job. Then things spiral out of control and they cannot quite make the payments. Creditors can reach into an improperly drafted trust and take their money. Properly drafted trusts make sure the principal is beyond the reach of creditors.
Costly Mistake #17: Not planning for a special needs child
A lump sum inheritance can turn off a special needs person’s public benefits temporarily or permanently. Supplemental needs trusts hold the money aside and protect the children’s benefits.
I hope that you don’t make any of these costly mistakes. And I hope you don’t make any of the many more mistakes I did not list here.
To win at estate planning, you don’t have to spend a lot of money or have a lot of assets. All you need is a proven, step by step method to make sure nothing is overlooked and gives you what you want. That is precisely what my P.A.T.H. to planning process does because I designed it that way.
I have spent the last 20 years honing planning processes down to a finely tuned system that avoids costly blunders and helps you achieve your goals.
If you would like to participate in this method – and avoid costly mistakes – I invite you to send an email to firstname.lastname@example.org .
I promise to do everything I can to help you.