Investor Toolkit

These costly estate planning mistakes can be fixed

Key Points
  • Just four in 10 Americans ages 60 and up have documents in place to plan for their finances and health care if something were to happen to them.
  • Not having a concrete plan can make you susceptible to financial mishaps, particularly elder fraud.

When it comes to planning for your estate, chances are you haven't made all the provisions you should.

A new survey from Wells Fargo found that four in 10 older Americans do not have in place the important documents that will take care of financial and health matters if they are incapacitated or dying.

Martin Poole | Stockbyte | Getty Images

Those gaps in financial planning could leave you vulnerable to unwanted events, including elder financial abuse.

While one in five Americans age 65 and up become victims of financial abuse, only one in 10 think it can happen to them, according to the research.

Here are the steps you can take now to limit your financial vulnerability.

Store your plans in an accessible place

"Gone are the days when it's sufficient to have all of this information in a lockbox under your bed," said Abby Schneiderman, co-founder and co-CEO of Everplans, an online estate planning platform. "You need to store it in a secure but accessible location."

Everplans and other platforms, such as Whealthcare Planning, allow you to create and store your plans online.

The advantage of this, according to Schneiderman, is that everything is in one place and accessible to loved ones even if they live far away.

Everplans is available both directly to consumers and through financial advisors. Whealthcare Planning is now available through financial advisors and plans to launch a direct-to-consumer version later this year.

Break down your to-do list into bite-size pieces

Make a list of the parts of your estate plan that need attention and work your way down the list.

The four key documents everyone should have in place, according to Wells Fargo, are a will, a power of attorney for financial matters, an advance health care directive and a power of attorney for health care.

Carolyn McClanahan, co-founder of Whealthcare Planning and a certified financial planner at Life Planning Partners, has her clients start with the most financially threatening tasks.

More from Investor Toolkit:
Here's how much an estate plan should actually cost to prepare
Still confused? Here's how the new federal tax law impacts you
Almost half of Americans don't expect to have enough to retire comfortably

That includes putting a high priority on naming beneficiaries for all assets and titling trusts properly.

Next, make provisions for your health care. That includes naming a health-care surrogate — someone to make important health-related decisions for you — and specifying the kind of care you want to have.

Breaking out the tasks you need to do one by one can help you stay motivated, Everplans' Schneiderman said.

"It can be overwhelming and that can be a huge hurdle in getting it done," she said. "We're using technology to make it easier on people in that way."

Update your plans regularly

One in six older Americans surveyed by Wells Fargo said their financial documents are out of date.

Many individuals, even the elderly, put off these tasks because of a lack of urgency, according to Ron Long, director of regulatory affairs and elder client initiatives at Wells Fargo Advisors.

Set a deadline for yourself and your family for when you want to accomplish these tasks.

Follow up when you receive prompts from your financial advisor, estate planning attorney or technology platform indicating your plans need updating.

Talk about your wishes with your loved ones

Most older Americans — 72 percent of those surveyed by Wells Fargo — said they treat their finances as a private matter.

Not talking about your money will prevent you from making a plan for what would happen if you became unable to handle your financial affairs, particularly if dementia were to set in, Long said.

McClanahan said she typically begins these conversations with clients when they're in their 50s.

Justice Department announces charges in $500 million senior fraud schemes
Justice Department announces charges in $500 million senior fraud schemes

Just talking about these issues creates neural pathways in the brain, McClanahan said, which will make you more prepared if these events actually arise.

"Having these conversations really provides peace and it doesn't make the situation more likely to occur," McClanahan said. "It just prepares you for it."

Wells Fargo's survey included 784 Americans ages 60 and up 798 adult children between 45 and and 69. Both groups surveyed had at least $25,000 in investable assets.