Estate planning – it sounds like something only the super-rich need to worry about. Many people take for granted what will happen to their property and money once they pass away, sure everything will go to the right people without any fuss. 

However, estate planning may be more important than you think, and ignoring it could lead to costly mistakes that may make matters tougher for your family in the future.

And even if you have a Will, there are still misconceptions about them and other estate planning moves that could lead to trouble.

Here are five common estate planning mistakes people make, from not writing a Will to forgetting to make provisions for their online accounts.

Not having a Will

Nearly 40% of New Zealanders may die intestate– that is, without a Will.

When this happens, the probate court system will make the decisions needed to dissolve someone’s estate – and those may be in direct contradiction to the deceased’s actual wishes. Probate cases generally take at least 6 months to resolve (even with a Will), but could be drawn out for years if someone dies without one.

Writing a Will gives you more control over important decisions that will be made after you pass away and possibly even whilst you’re alive.

These might include appointing an executor to carry out your final wishes, creating an advance directive for healthcare decisions, and deciding on custody matters for children and pets. Otherwise, these important tasks may fall to someone who is unprepared to take them on or who may not make decisions according to your final wishes.

Having insurance policies paid to your estate

Both single and two-income homes could be severely impacted by the loss of an earner.

Their death could significantly lower the family’s cash flows and greatly reduce disposable income—often without warning. Cash is important following a death, as your family may face many unexpected costs. 

Life insurance or funeral insurance should never be made payable to an estate. Rather than being paid directly to those who need it most, having the benefit paid to your estate ties this money up in the probate process. It could be months until they have access to the funds, as opposed to a matter of days or weeks depending on the insurance policy you’ve taken out.

Your family will most likely have to depend on emergency savings until then, which may not be enough to cover day-to-day expenses plus things like probate costs and planning the funeral.

Neglecting to review & update estate documents

Once your will is written, it should be reviewed and revised periodically.

Life brings surprises, and things can change in a heartbeat. Events like marriage, divorce, births, deaths and even changes to the law may signal that your Will needs updating. 

Divorce and remarriage especially can be important times to revise a Will. In the case of divorce, care must be taken to remove your ex-spouse’s name from any prior Will. However, you may want to also remove them from shared insurance cover, as your power of attorney or as the primary beneficiary on any insurance policies.

You may also need to check that children from past relationships are recognised appropriately in your current Will, so they’re not accidentally disinherited when you pass away.

Writing funeral instructions in a Will

Another oversight with potentially unwanted consequences is including instructions regarding your final arrangements in your Will.

If you have particular burial or cremation instructions, you’ve made arrangements for paying for your funeral or have any other funeral wishes, it does no one any good if that information is in a Will that likely won’t be seen until long after the funeral takes place. 

Customarily, Wills kept in safe deposit boxes or left with the family attorney are only read or presented to family members a considerable time after a person’s death. This could be weeks or even months later. Your loved ones need immediate access to any funeral instructions – including proofs of payment and contact information.

They’ll also need policy numbers and contact information for life insurance or funeral insurance policies. Instead of including this information in your Will, consider creating a separate funeral wishes document to be left with a trusted family member.

Forgetting about digital assets

Lastly, the information we leave behind online may need to be taken into account when writing a Will.

Passwords to online bank accounts, bill payment services, email, and social media accounts may be essential for your executor or family to close out accounts and pay off your debts. Login IDs and passwords, plus connected phone numbers for account verification should be left in a sealed envelope in a secure location, with instructions in your estate documents as to where they may be found.

These often-overlooked estate planning moves can – if neglected – cause even more grief to a family already in mourning. Taking care of them now—either in a Will or in other documents—could make tying up your estate a bit easier when the time comes.

For more expert advice on insurance check out our Grown Ups: Family finances section.

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