10th Oct 2018
Neglecting to properly prepare for estate planning can lead to disastrous results. Your family members could end up destitute or spend a great deal of money in the ligation process. It is imperative to consult with an estate planning attorney to ensure that you have all of your documents in place. Following are some of the most common mistakes people make during the estate planning process and how to correct them.
- Attempting to Do Your Estate Planning Without Any Help
One of the most common mistakes that people make when planning their estate is to attempt to do the entire process without any assistance. This includes handwritten or self-completed documents or forms. A self-composed document does not constitute durable power of attorney, last will and testament or other documents pertaining to estate planning. Even if it is in fact a properly written and completely valid document, the client may not know exactly how to properly execute the document. For example, an improperly executed ceremony for a will makes the document null and void. To ensure that all of your estate planning documents are drafted and executed properly, it is always wise to hire an experienced and qualified estate planning attorney.
- Not Having a Last Will and Testament in Place
The majority of adults do not have a will in place. In the event of your demise without a last will and testament, or living trust, many issues can ensue. In this instance, it would be up to the local and state law to determine who inherits your property if it has not been transferred to a beneficiary or trustee. Your family or whomever is entitled to your estate will have to go to great lengths and spend a large sum of money to prove their relationship to the deceased party as well as setting up trusts and guardianship for those beneficiaries who are minors or disabled. As well, your trust and assets may end up going to someone to whom you did not wish to do so. In addition, those heirs who are disabled and receiving assets such as Supplemental Social Security Income or Medicaid could end up losing those benefits.
Not Properly Designating Beneficiaries for Joint Accounts
Accounts that are jointly owned or have beneficiary designations (meaning “in-trust-for” or “transfer on death’ accounts) such as brokerage or bank accounts may seem like a good idea as they are designed to transfer automatically to the joint beneficiary in the event of your death. Many clients are not aware that the terms in their will do not alone dictate the transfer of these accounts. It is imperative to be aware of how these accounts are acclimated into your estate plan as a whole. For example, pertaining to IRAs and 401(k)s, it is essential to identify a designated beneficiary in order to avoid issues such as the loss of deferral of income tax in the event of your death. You should consult your estate planning lawyer about your beneficiary designation and account transfers to ensure that these designations are reflected in your estate plan.
- Forgetting to Include Blended Families or Former Marriages in Your Estate Planning
As the joining of two families in a second marriage can be quite overwhelming, couples often neglect to create an estate plan that includes their blended families. It is imperative to do so to ensure that your assets are properly distributed at the time of your death. If you do not properly plan for your estate, your surviving children, grandchildren or spouse from a previous marriage can be left destitute. Thus, it is critical that you plan ahead by purchasing additional life insurance, opening tiling joint accounts, and creating trusts. This can save a lot of time and effort on ligation at the time of your demise while keeping peace within the family unit.
- Failing to Plan for Disability or Incapacity
In the event that you should become incapacitated or disabled, it is imperative to create documents that designate an agent to handle your business affairs as well as your health care plan. Durable power of attorney and health care proxies should be chosen to make business and medical decisions in the event of disability or incapacity, regardless if the situation is short term or permanent. If these documents are not in place, it is the job of the local and state law to select a health care agent as well as legal guardianship and durable power of attorney.
- Withholding Information from Your Estate Planner
You might be hesitant to disclose certain details in reference to your financial affairs or family details Many clients often withhold the details or often provide only vague information. An experienced estate planning attorney will offer advice on how to minimize tax, increase the value of your estate and avoid disputes within the family in the event of your demise. However, if you do not disclose all of the relevant information, your attorney will not be able to make an informed decision or properly design your estate plan
- Neglecting to Re-Examine Your Estate Plan
It is crucial that you inform your estate planning attorney of any changes that should occur such as marriage, birth, divorce or death. As well, you need to inform them of any changes in your insurance, retirement, or other policies and joint accounts. Neglecting to do so can cause costly legal disputes at the time of your death. You should re-examine your estate plan every five to seven year or after a major life event.
Be sure to call the estate planning experts at Tomkins Law when it comes time to plan your future. We have years of experience in handling estate planning and are ready to assist you with the process. Call us today at 1-714-385-0044 for a confidential consultation.