ABOUT 60% OF AMERICANS do not have a will. Of the roughly 40% who do, chances are their will is outdated or contains costly errors. Here are some big estate-plan goofs and how to fix them.

OUCH: WRONG GUARDIAN NAMED.
When drawing up a will, most people name a brother or sister as their children’s guardian. That person may have made perfect sense at the time, since siblings are among the people most likely to raise your children as you would.

But if you haven’t updated your will recently, that brother or sister may have moved away, suffered serious health problems, lost a job, or gotten divorced—making him or her less desirable as a guardian.

“You need to protect against the Cinderella Syndrome—children being raised by a bitter, nasty relative who has fallen on hard times,” warns Martin

Shenkman, an estate attorney in New York. When naming a guardian, certainly consider family members, advises Shenkman. But also name two or three backup guardians.

In addition, add a provision to your will that says the primary guardian will be skipped if he or she does not meet specific easy-to-track criteria—such as local residency, marriage, employment, or any other factor you feel is important.

Also, avoid naming a couple as coguardians. “I’ve seen plenty of cases where divorcing couples battle for custody of the child they’re raising,” says Shenkman. “Instead, just name the person who will be the guardian.”

OUCH: WRONG TITLES ON ASSETS.
Many people assume that those they’ve named in their estate documents will inherit all of their assets. Not quite. Only assets that are titled correctly and that actually pass through the estate will end up in their hands.

For example, assets in an IRA, 401(k), SEP, or other retirement account do not pass through your will. Those assets pass to the people named as beneficiaries—no matter what your will says. Your beneficiary forms are on file with the brokerages managing the accounts.

As for your other major assets—such as houses, cars, boats, and taxable investment accounts—their title documents determine whether they pass through your will or not. For example, you and your spouse may own a house as “joint tenants.” This means you both own it, and when one of you dies, the other will inherit the deceased’s share.

But if you wanted to set up a trust to ultimately receive the house for the benefit of your children and to escape estate taxes, you and your spouse would need to own the house as “tenants in common.”

“Review your will with your estate attorney, and go over how all of your assets are held,” says Colleen Barney, an estate attorney and author of Best Intentions: Ensuring Your Estate Plan Delivers Both Wealth and Wisdom. “You may need to make changes to titles, name new beneficiaries, or alter your will based on life changes.”

OUCH: KIDS AS COEXECUTORS.
Many people name two or more children as coexecutors of their estate. They do this because they think it’s fair and that siblings will keep each other honest during the process.

“Too many parents think their kids love each other as much as they love them,” says Barney. In reality, children named as coexecutors are more inclined to fight over whether the estate is being handled efficiently or equitably.

A better solution, says Barney, is to name a child who’s financially savvy and another family member or accountant. “This provides checks and balances and prevents your children from holding a lifetime grudge.”

OUCH: YOUR INTENT ISN’T CLEAR.
Even the most carefully worded wills do not capture the loving wishes of those who signed them. For example, your will may state that your two children are to inherit your house, fifty-fifty. But your will won’t shed light on your desire for how the house should be divided, used, or disposed of in the future—nor is a will the place to air those feelings.

Instead, write a sealed, heartfelt letter of instruction that will accompany your will. The letter should express to your executor, guardian, or trustee your views on the tasks they are responsible for completing and how you’d like those actions carried out.

For example, you may want to explain to the guardian named in your will what type of religious exposure you want for your children or where you want your child to attend school and why. “Most fights occur because the people with power assume they know best what you would have wanted,” says Shenkman. “A clearly written will and a letter of instruction improve the odds they’ll unite and respect your wishes.”  MM

From http://www.successmagazine.com/, author Marc Myers