Trusts, Wills and What Most People Miss in Their Estate Plan

Author: Jennifer Horton, CFP^®, CTFA^®

When people think of estate planning, they often focus on drafting a will or creating a trust. While those are important pieces, a comprehensive plan goes well beyond that. Estate planning is about protecting your family, easing burdens during difficult times, and making sure your wishes are carried out. Unfortunately, there are a number of details that often get overlooked, and those gaps can create problems for loved ones.

Keeping Beneficiary Designations Up to Date

Your will does not control who inherits certain accounts. Retirement plans, life insurance, and other financial accounts often pass directly to the beneficiaries listed on the paperwork. If those designations are out of date, your assets may go to the wrong person.

It is also important to name contingent beneficiaries. These serve as backups if your primary beneficiary is no longer living. Without them, those assets could end up going through probate unnecessarily.

Making Sure a Trust is Funded

Setting up a trust is only the first step. You also need to move the right assets into it. This process, known as funding the trust, is often forgotten once the paperwork is signed.

If the trust is not funded, it may not offer the protection or benefits you expected. In many cases, your estate could still end up in probate, defeating one of the key purposes of creating the trust in the first place.

Planning for Incapacity

Estate planning is a constantly evolving process and should not focus solely on what happens after death. It also needs to account for what happens if you become unable to make decisions on your own.

Without powers of attorney or healthcare directives in place, your family may need to petition the court to act on your behalf. Putting these documents in place now ensures that someone you trust can handle financial and medical decisions if the unexpected happens.

Covering Digital Assets and Online Accounts

Your estate today may include more than just physical property. Online accounts and digital assets can be an important part of the picture. Social media accounts, email logins, cryptocurrency wallets, and services like PayPal can be nearly impossible for loved ones to access without advance planning. Taking time to record your digital assets and how they should be handled can save your family frustration and confusion later on.

Addressing Property in Other States

If you own a second home or property in another state, your executor may need to open probate there as well. This can be costly and time-consuming. Placing out-of-state property into a trust is one way to simplify the process and spare your loved ones from added complications.

Remembering Heirlooms and Sentimental Items

Families often assume conflict will arise over money, but in many cases, the biggest disagreements are over sentimental items. Jewelry, china, or collectibles may not have significant financial value, but they carry deep emotional meaning.

Including these items in your estate plan and spelling out who should receive them helps reduce tension and ensures your wishes are clear.

The Bottom Line

Estate planning encompasses more than just wills and trusts. By reviewing these often-missed areas, you can strengthen your plan and give your loved ones peace of mind, all while ensuring no important detail is left to chance.