Last week, our blog discussed how much of the world was not only shocked by the sudden passing of Prince, but also by his failure to have executed even a simple will. Indeed, his estimated $300 million estate is currently at the center of a brewing legal battle among his sister and five half-siblings.
While it is admittedly astounding that Prince neglected to take this step, statistics show that he's far from an anomaly. Indeed, it's estimated that as many as two-thirds of all U.S. adults have no simple will in place, meaning the laws of their respective states will determine the fate of their assets.
Interestingly enough, experts have indicated that the failure to execute a simple will is only one of the four most common estate planning errors.
Neglecting to plan for your incapacity
The mistake that people make here, say experts, is that they mistakenly believe that estate planning only really has to do with planning for death. The reality, however, is much more complex, as they also need to plan for the unfortunate possibility of being left incapacitated by the onset of an illness or a sudden accident.
The documents in question that people are failing to execute are an advance health care directive, which is comprised of a health care surrogate designation and living will, and a durable power of attorney.
To recap, these three documents accomplish the following:
- Living will: Outline the type of medical care you want provided, withdrawn or withheld in the event of your incapacity
- Health care surrogate designation: Appoint a trusted loved one to make medical decisions on your behalf in the event of your incapacity
- Durable power of attorney: Appoint a trusted loved one to make financial decisions on your behalf in the event of your incapacity
We'll examine the remaining two estate planning mistakes that people are most likely to make in our next post.
Consider speaking with an experienced legal professional if you would like to learn more creating a comprehensive estate plan.