Here are four more common
mistakes in estate planning. If your plan is in place and current, this will
serve as more validation that you are on the right track. Feel free to share
this information with friends and family members, especially those who may not
have a plan in place.
1. Not having a
coordinated estate plan. It can be difficult to coordinate multiple
beneficiary designations and titles so that your beneficiaries inherit the way
you want. For example, while the benefit payable from a life insurance policy
generally remains the same, real estate and investment values can fluctuate
greatly. This makes it quite possible that one beneficiary will receive more
and another will receive less than you intended. Keeping beneficiary
designations and titles balanced while you are living is a challenge;
impossible if you should become ill or incapacitated. Also, if a beneficiary
dies, you may want to control who ultimately receives that share of your estate
instead of it letting the beneficiary choose who will receive it.
One easy way to coordinate all assets into one coordinated
plan is to make a trust the owner and beneficiary of as many assets as possible,
then put the distribution instructions in the trust document. This ensures that
each beneficiary will receive the correct proportionate amount of the estate,
regardless of the value of an individual asset. To add a beneficiary or change
a beneficiary’s inheritance, only the instructions in the trust document need
to be updated; this is a much simpler process than having to change multiple
titles and beneficiary designations. The trust can also include your
instructions for what happens to a beneficiary’s share upon his/her death,
preventing the inheritance from falling into the hands of someone you might not
approve of.
2. Not funding a
trust. A trust can only control the assets that are placed into it. The
document may be written well and have excellent instructions, but until it is
funded (by changing titles and beneficiary designations), it doesn’t control
anything.
3. Not titling newly
acquired assets in the trust’s name. It is not unusual for people to
transfer existing assets to their trust but then forget to add new ones. It
bears repeating: a trust can only control the assets that are placed into it.
Any assets purchased or accounts established after the initial funding is
complete must also be titled in the name of the trust so they can be part of
your complete, coordinated plan.
4. Not using a
qualified attorney. Estate planning is not something that should be
attempted with a kit or online program. A simple mistake or omission can have
far reaching effects that only come to light after you are gone. A local,
experienced estate planning attorney understands the terms and legal
requirements in your state. Most have counseled many families and have seen the
results of proper and improper planning. An experienced attorney can guide and
assist you in making smart decisions about your estate planning, including who
should be the guardian of minor children; how to provide for a child or elderly
parent with special needs; how to provide for children fairly (which may not be
equally); and how to protect an inheritance from creditors and irresponsible
spending.
If you need help with your estate planning, please contact
our Palo Alto estate planning attorneys. We will be happy to help you create the plan you desire or update
the one you already have.
