If you’re like most people, you have thought about and know how you want your estate distributed when you die or your affairs handled should you become incapacitated. Unfortunately, without proper planning and documenting your wishes, your thoughts and intentions may not be enough. Here are some of the most common estate planning mistakes people make:
- Failing to plan. The single biggest mistake is failing to create a plan and not understanding how your assets will be distributed upon your death. Without an estate plan, state law of the state in which you live determines how your assets will be distributed. Normally, your spouse (if you are married) is entitled to a portion of your estate and the rest is divided among other relatives (your children, parents, or siblings). Only if you have no living relatives will your estate go to the state. For most people, the state’s plan (“Intestate Succession”) is not what you want to happen to your assets. In addition, without an estate plan, you have no way to name who will be the guardian of your children or who will act for you if you become incapacitated.
- Doing it yourself. While it is tempting to try to save money by using a do-it-yourself online will service or just writing something up yourself, such solutions may only cost you or your heirs additional money in the end. Your situation may not be standard and fit into the standard plan created and without consulting with an attorney you will not learn about what planning opportunities are available that might meet your needs. Additionally, you may not understand the legal requirements to execute the documents created in a DIY estate planning program and the result may be an estate plan that is not properly executed and void. Unfortunately, these problems are typically only discovered after your death when it is too late to correct the mistakes.
- Not planning for incapacity. In addition to specifying what will happen to your assets when you die, an estate plan should provide for what happens if you become incapacitated through documents such as a power of attorney, health care directive and revocable living trust, which appoint someone to act on your behalf during periods of incapacity.
- Executing a Trust and failing to retitle assets and fund it. If your estate plan includes a revocable living trust, once you execute the estate plan, you aren’t finished. Revocable Living Trusts avoid probate if they are actually funded, i.e., if you retitle assets into the name of the trust. If you fail to retitle the assets into the trust, probate will still be required.
- Not updating beneficiary designations to be consistent with your estate plan. Retirement accounts and other accounts with named beneficiaries do not follow your will or trust—they are distributed according to the forms you fill out with the insurance company or financial institution. It is important that you review these accounts and verify that the named beneficiary is who you want it to be and consistent with your estate plan.
- Not reviewing the plan periodically. Once you’ve got an estate plan in place, it is important to keep it up to date. Circumstances change over time and your estate plan should be reviewed and updated to keep up with these changes. Examples of major changes that may affect your plan include getting married or divorced, having children, experiencing an increase or decrease in assets, the death of family members, the death or incapacity of a named guardian or executor, or having a family member experience medical problems which qualify them for government benefits. Even if you don’t have any major changes, you should review your plan periodically to make sure it still expresses your wishes.
At Grissom Law, we work with individuals and families to develop estate plans. Each individual’s needs are unique and this article only provides an overview of one aspect of estate planning. For more detailed information and to discuss your specific case, call us today at (678)781-9230 or email us at email@example.com to schedule an appointment.
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