FIVE ESTATE PLANNING MISTAKES YOU MAY BE MAKING RIGHT NOW

1. Not Talking To Your Family About Your Estate Plan.

            We've all seen the movie scene where the family gathers around Grandpa’s attorney while he reads off who gets what. There is a dramatic and unexpected gift made to a long lost son, or everyone gets disinherited and the dog takes it all. While this makes for wonderful movie drama, it makes for horrible estate planning. Talk to your family about your intentions. A lot of family feuds could have been prevented if the creator of the will and/or trust had been clear about their intentions to family members before they passed.

            If your concern is privacy or keeping your intentions private up until you pass, you can work with an attorney to draft a clear letter of intention to accompany your estate plan. A letter of intention is a non-binding but influencing document that can spell out to your loved ones what you hoped to accomplish with your estate plan. Legal jargon sometimes cannot convey your hopes and dreams for your family like a letter or heart-to-heart with loved ones can.

2. Doing It Yourself.

            I know, I know, you can go on (insert legal DIY website here) and download a Will for little to no money. My response: you've worked hard to earn what you’ve got, why take the risk. A knowledgeable attorney can help you avoid mistakes that can cost you and your family time, money and headaches down the road. My mantra “ Pay now, or Pay later…either way you're gonna pay.” It simply means this; you can pay a knowledgeable attorney to draft a complete and comprehensive plan now and have your assets pass and estate administered seamlessly later. Or you can DIY now to save money and have your family pay a knowledgeable attorney to step in and help sort through an incomplete or poorly drafted estate plan later.

        If, despite my warning, you are confident in your DIY skills and go forward with drafting your own documents, have an attorney review the documents to make sure they meet the minimum legal requirements. Most attorneys, including myself, will charge an hourly rate for legal advice/document review. An attorney can also help you determine whether you have included the documents relevant to your estate planning goals.

3. Not Funding Your Trust

            Ok so you made the first steps, consulted with an attorney, got your ducks in a row, and now the crisp papers of your estate plan pad your safe deposit box. Good for you! But those trust documents do not provide protection for your assets if your assets are not in the trust.

           If you are not sure how to move your assets into your trust consult with your attorney. Putting items in a trust can be as simple as naming or retitling assets into the trust. Some assets, like annuities and closely held stock ,  will require the help of your CPA of financial advisor in order to facilitate a proper transfer. In any case, in order for the trust to provide probate aversion and tax benefits, the assets must be in the Trust.

           If your trust is irrevocable, you will still have access and maintain control over your assets. If you trust is irrevocable, talk to your attorney or CPA about the best way to fund you trust while ensuring that you have the assets you need to address financial obligations and maintain your lifestyle.

           

4. Half Doing Your Estate Plan

            I recently spoke at a community legal forum, where a woman stood and shared with the group that her uncle had prepared his trust documents himself. He properly placed his home in the trust. I asked the woman, “So what is the problem ?” She waved the trust at me and said that the trust was the only document he had executed. There were no other documents, he had not executed a will or any power of attorneys. More importantly there was no pour-over will to default all of the assets left outside of the trust into the trust. As a consequence of the missing documents, the uncle, left his niece, the intended beneficiary of all his assets, with the home titled in the trust and nothing else.  The woman, who I found out was the man’s niece, was this woman angrily waving the manila folder at the crowd.

            This story may straddle the fence as an argument against do-it-yourselfers, but more importantly it shows the importance of creating a complete and comprehensive plan. I am asked all the time, by clients, if I could just offer the estate planning documents piece meal. I can and do but I always but a warn against it. An estate plan is just that, a plan, and in order for the plan to work properly you must have all of the elements of the plan. The manila-folder-waving-woman was months into a contested and stressful probate process that I believe her uncle intended to save her from.

I was reminded of one of my mother’s favorite quotes “Do it right or don't do it at all”.

5.Not Having An Estate Plan

            Of course the big no-no is not having an estate at all. Nearly once a week someone will tell me, “I don't really have anything of value anyway.” This argument is the reason I believe many people don't utilize any estate planning tools. In reply I tell them, and you “Everyone has something worth giving to your family when you pass”.

            To be clear, I'm not talking about money or homes. I am talking about the relief you provide your loved ones when they don't have to guess at complicated decisions in the wake of your death. It is hard enough to say goodbye to a loved one, it is even harder to then have to make the decision to cut off life support, or argue with family members about burial or cremation, what to do with the remains, sell the home or keep it, battle over guardianship of a minor or an incapacitated parent. You see where I'm going with this. An estate plan is not about giving away a piece of property, it is about giving your loved ones a piece of mind.

Keo'vonne W.

"Turn Your Dream Into Your Legacy"