Estate planning requires you to plan for the unexpected and be proactive. Many people ignore this until it is too late. This unwillingness to confront reality can often lead to severe hardship, expense, and trauma for the loved ones you leave behind.
The recent rise of online estate planning services such as LegalZoom®, Rocket Lawyer®, and Trustandwill.com may have led you to believe that estate planning is an easy DIY affair. It involves only filling in the appropriate legal forms. Proper estate planning involves more than just filling out forms.
You’re likely to make mistakes when you create a DIY trust or will if you don’t understand the legal process well. These mistakes will not be discovered until your death, and the people you intend to protect will have to clean up the mess you made to save money.
Estate planning is not something that can be done in a single way. Even if your situation seems simple, it is almost impossible to plan for every circumstance. Here are ten common mistakes in estate planning. The worst is failing to make an estate plan.
1. Leaving No Estate Plan At All
Without an estate plan, the court will determine who inherits your assets if you die. This can cause many problems. Our state’s Intestate Succession Laws determine who is entitled to what property. These laws depend on whether you are married or have children. Children and spouses are prioritized, followed closely by other members of your closest family.
If you are single and have no children, your assets usually go to your parents and siblings. If you don’t have any living siblings or parents, you can transfer your assets to more distant relatives. Your assets will go to the state if no living relatives are available. State intestacy laws are only applicable to blood relatives. This means unmarried partners or close friends would not be eligible for anything. A plan is essential if you want your assets to be passed on to someone other than your immediate family.
Things might seem to go smoothly if you are married with children. But, this is not always true. For example, if you are married and have children from an earlier relationship, the court may give all of your assets to your spouse, leaving your children without anything. Another scenario is where you may be distant from your children or not trust them financially. However, state law determines who will get your assets if you don’t have a plan.
Also, if you die without a plan, your loved ones could get into a bitter court battle over who gets the right to your property. Your loved ones may also be in conflict over your medical care if you are incapacitated. Although you may believe this will never happen to you or your loved ones, it is common for families to be torn apart even when there isn’t significant financial wealth.
Fleurinord Law PLLC will help you create a plan that manages your assets and medical care exactly as you want. We consider all your family dynamics so that your death or incapacity is not more costly or painful than it should be.
2. Consider More Than Just the Will
Many people, especially older ones, believe that a Will is all they need for estate planning. Although a will is essential to almost every adult’s estate planning, it can help ensure your assets go where you want them if you die. However, there are some limitations to using a will alone.
- Your family will need to go through probate. This can be costly and time-consuming.
- If you are incapacitated due to illness or injury, wills won’t provide any protection, and you can’t make your own financial, legal, and medical decisions.
- Wills do not cover jointly owned assets or beneficiaries.
- Wills do not provide protection or guidance regarding when and how your heirs will take over their inheritance.
- Name guardians for minor children in your will could make them more vulnerable to being taken in by strangers.
These facts show that if you only have a will for your estate plan, you’re missing out on valuable protections for your assets and your family’s right to sue you if you pass away or become incapacitated. All of these issues can be managed with trust. However, trusts are not a panacea. As you will see, these documents have their unique drawbacks.
3. Not Properly Funding a Trust
A trust can protect your family from court. Many people know this. You may believe you can set it up online or have a lawyer create it for you. Even though that may be true in some cases, especially if you don’t have many family members or assets, you will likely overlook the most crucial part of establishing trust.
Unfunded trusts are trusts that exist but don’t have any assets. This could be because your assets weren’t properly retitled or because you bought new assets after you created your trust. This common problem; it can leave your family in a huge mess even though your trust has been created.
It is vital to fund your trust properly. If assets aren’t properly funded, trust won’t work, and your family will need to go to court to take over the property. You must also ensure that you properly fund your trust when you acquire assets after you have created your trust.
Although many lawyers can create trusts for you, very few will ensure your assets are properly accounted for and funded into the trust. Even fewer will keep your inventory current as your assets and life change. Although it might sound absurd, this is common in many estate planning firms. But not ours.
Fleurinord Law PLLC will ensure that all your assets are correctly titled when you create your trust. We will also ensure that any additional assets you acquire throughout your life are properly inventoried and funded to your trust. This prevents losing your assets and protects your family from being forced to court because your plan has not been completed.
These facts are important to remember. If your estate plan includes trusts, you need to work closely with us to ensure it runs exactly as you planned.
4. Maintaining an Up-To-Date Inventory of Assets
Even if you properly fund your assets into your trust, your estate plan won’t be of any value if your heirs aren’t able to locate it. The U.S. Department of Unclaimed Property currently has more than $58 trillion in lost assets. This is because someone died or became incapacitated, and no one knows how to find their assets.
This is particularly important for digital assets such as email, social media, and cryptocurrency. If you don’t address these assets in your estate planning, you could lose them forever. Every estate plan we create includes a comprehensive inventory of all your assets. You can be sure that your loved ones will have a complete inventory of all assets and know where to find them in an emergency.
This is not all. We can help you build a complete asset inventory. Additionally, we have systems that will ensure that your inventory is always up-to-date throughout your life. We have created a free personal resource map tool for this critical issue. It will help you start the inventory process right away without the assistance of a lawyer.
Fleurinord law PLLC invites you to meet with us and discuss how your inventory can be incorporated with other estate planning strategies.
5. Failing To Regularly Review & Update Your Estate Plan
It is important to keep an updated asset inventory and that all planning documents are regularly reviewed and updated. Too often, people make a will or trust and then forget about it.
An estate plan isn’t a one-and-done deal. You must ensure that your estate plan is up-to-date as your life, laws, and assets change. This is essential if you plan to be effective for your loved ones, avoid conflict and stay out of court.
To ensure that your plan is current, we recommend reviewing it annually. You should also ensure that your plan is updated immediately after major life events such as divorce, death, or inheritances. There are built-in processes that will ensure this happens. Ask us about them.
An annual life review is more than a necessity. It can be a lovely ritual that will put you at ease and help you to plan your life.
If you’re ready to have your estate planning done right and it is affordable, contact us today for a Life and Legacy Planning Process. This process can be tailored to you, your family, and your wishes. It will also educate you about the best ways to achieve your goals for those you love.