The Top 10 Estate Planning Mistakes and How to Avoid Them
Most everyone is aware that it is important to have an estate plan. Far too often however, they do nothing about it. While no one likes to think about their own mortality or the prospect of becoming disabled, you can only plan before these events occur.
Solution: Schedule a meeting with a qualified estate planning attorney to discuss your situation.
2. Not Having a Will.
Most people do not even have a basic will. A will is very helpful in nominating who will be responsible for administering your estate and how your estate assets will be distributed after the payment of your funeral, medical and other expenses.
Solution: Schedule a meeting with a qualified estate planning attorney to discuss how a will could benefit you and your family.
3. Not Having Powers of Attorney.
Planning for death is only part of estate planning. There is a very real possibility that at some point before you die, you will be unable to pay your bills or make medical decisions due to a stroke or debilitating disease such as Alzheimer’s or Parkinson’s. In addition to a will, it is extremely important to have a Durable Power of Attorney and a Health Care Power of Attorney.
Solution: Meet with a qualified elder lawyer to discuss completing your estate plan including powers of attorney. You should also talk with your family to see who would be willing to step up to make financial and medical decisions on your behalf.
4. Failure to Recognize That a Will Won’t Avoid Probate.
Probate is the legal process in which assets are transferred after a person has died. While a will ensures that your wishes are carried out throughout the probate process, your family will still have to incur the fees and costs associated with probate court.
Solution: When meeting with an estate planning attorney, it is important to consider estate planning options other than a will. One of these options is a trust which will avoid probate.
5. Failure to Consider a Trust.
Far too many people believe that a trust is only for the wealthy. They also fail to realize how expensive and time consuming the probate process can be. A trust also offers more flexibility for example in leaving assets for the education of grandchildren or for loved ones with special needs. Additionally, because a trust goes into effect at signing (not upon your death like a will) it can also provide for the possibility of the administration of your trust if you should become disabled.
Solution: It is important to meet with a qualified attorney and discuss the pros and cons of a will and a trust so you can make the best decision for your particular situation.
6. Failure to Change the Title of Assets into a Trust.
For those who decide a trust is right for them, simply signing the trust is only part of the process. Assets such as a home or other real estate, bank accounts, stocks, bonds, etc. must be transferred into the name of the trust in order to avoid probate.
Solution: An estate planning attorney can assist you in re-titling your assets.
7. Doing it Yourself.
While everyone likes to save money, the old adage that you “get what you pay for” is particularly true in estate planning. If your time and money are important to you, it is recommended that you do not attempt to do your estate planning with information you read or obtain online or in a bookstore.
Solution: Your estate plan should be done with the assistance of an attorney who has significant experience in assisting others with situations similar to yours. A Certified Elder Law Attorney (CELA) or a member of the National Academy of Elder Law Attorneys (NAELA) is often a good indication of his or her legal specialty.
8. Putting Children’s Names on Bank Accounts, Deeds, etc.
Adding children to bank accounts, real estate or other assets is often the surest way to create problems after your death. It is much better to transfer these assets to your loved ones after your death instead of sharing them during your lifetime.
Solution: An elder law attorney can help you prepare your estate plan so that your children will receive these assets after your death.
9. Incorrectly Naming Beneficiaries.
A good estate plan must also consider those assets that have a beneficiary designation, such as life insurance, IRA, 401K, etc. The failure to correctly name both primary and secondary beneficiaries can undermine a well drafted will or trust.
Solution: A qualified elder lawyer will be able to look at your assets and determine where primary and secondary beneficiaries are needed.
10. Failure to Periodically Review Your Estate Plan.
A will or trust drafted 5 years ago may not be appropriate for you now. As your circumstances change or new laws are enacted, your estate plan may need to be revised.
Solution: It is recommended that you review your estate plan every three years (unless your situation requires a more frequent review) to make sure it still reflects your wishes and whether it is affected by any new laws.
This article was written by Brett A. Howell, Certified Elder Law Attorney and was published as a service of The Elder and Estate Planning Law Firm, P.L.L.C. This information is for general informational purposes only and does not constitute legal advice. For a consultation to address specific questions, please call (810) 953-3846