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"
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