Just as we discussed last month regarding Medicaid planning, there is also a lot of misinformation that exists in the area of estate planning. Nearly every day someone will tell us for example, that they heard that if you have a will “there is no probate”. Unfortunately, this type of erroneous information is often passed on as helpful estate planning advice. Clients frequently learn the hard way that relying on such advice can cost them thousands of dollars. In an effort to help educate and prevent others from making these all too common mistakes, we have complied our list of the top 10 estate planning mistakes.
Most everyone is at least aware that it is important to have an estate plan. Far too often however, they procrastinate doing anything about it. Don’t let this happen to you.
2. Not having a will.
The majority of people do not even have a basic will. A will is essential in nominating who will be responsible for administering your estate and to whom your estate will be distributed to after your death.
3. Not Having Powers of Attorney.
Planning for death is only part of estate planning. In addition to a will, it is extremely important to have a durable power of attorney for your finances and a health care power of attorney for medical related decisions.
4. Failing to recognize a will won’t avoid probate.
Assets in a decedent’s name only will not avoid probate even if there is a will.
5. Failing to consider a trust.
Too many people mistakenly believe a trust is only for the wealthy. They also fail to understand how expensive and time consuming probate can be. A trust often can save your family time and money if you become disabled or upon your death.
6. Failing to properly fund a trust.
For those persons who decide that a trust is right for them, simply signing the trust is only part of the process of having a trust. Assets such as a home or other real estate, bank accounts, stocks, bonds, etc., must be re-titled into the name of the trust in order to avoid probate.
7. Doing it yourself.
While everyone loves to save money, the old adage that you “get what you paid for” is particularly true in estate planning. If your estate and loved ones are important to you, it is strongly recommended that you do not attempt to plan your estate on your own.
8. Putting children’s names on assets.
Adding children’s names to bank accounts, real estate or other assets is often the surest way to create problems after your death.
9. Incorrectly naming beneficiaries.
A good estate plan must also take into account those assets that have a beneficiary, such as life insurance, annuity, IRA or 401K. The failure to correctly name primary and secondary beneficiaries will undermine even a well drafted will or trust.
10. Failing to periodically review your estate plan.
A will or trust drafted years ago may not be appropriate today. As circumstances or laws change, it is recommended that your plan be reviewed by an elder law attorney.