Top 10 Estate Planning Mistakes... And How to Avoid Them
Mistake #1: Doing nothing because you think planning for death means you’ll die sooner. Truth/Solution: Everyone dies, but some have peace of mind and make things much easier for their families by doing a little planning. Mistake #2: Believing your Last Will and Testament will allow your family to avoid probate. Truth/Solution: Having a Last Will does not allow your estate to skip probate, and the best solution is typically a revocable trust. Mistake #3: Forgetting to name beneficiaries for your bank accounts. Problem/Solution: Your accounts will be held up in probate, which can be avoided by making a Pay on Death (POD) designation at your local bank branch. Mistake #4: Forgetting or failing to name contingent beneficiaries for your investment accounts and/or life insurance policies. Problem/Solution: If your primary beneficiary dies before you do, your accounts must be probated; simply name backup beneficiaries. Mistake #5: Creating a living trust but neglecting to put your “stuff” into it. Problem/Solution: Any assets not owned by your trust must be probated; make sure your trust is properly funded. Mistake #6: Making one of your children a joint owner of your home, trying to avoid probate. Problem/Solution: Among other things, you lose control of your home; the same result can be achieved in other ways (e.g., living trust, enhanced life estate deed). Mistake #7: Using an online document assembly program to create your own estate planning documents. Problem/Solution: You won’t know you’ve made a mistake until it’s too late; proper planning using an experienced estate attorney will help you achieve the results you need. Mistake #8: Failing to assign business interests to your revocable trust. Problem/Solution: Business ownership must be probated, which can be very “messy” if you have business partners; simply assign your business interest to a living trust. Mistake #9: Leaving assets directly to your minor or disabled children. Problem/Solution: Your kids will get a “pot of money” at the age of 18 (not usually a good idea), and your disabled kids will be disqualified from receiving government benefits. Mistake #10: Failing to coordinate investment account beneficiary designations with your will or trust. Problem/Solution: The terms of your will or trust won’t control the disposition of these assets, frustrating your intended plans; make sure you name the trust or testamentary trust in your will as the beneficiary.