Three Expensive and Common Estate Planning Mistakes
Mistake 1: Going Through An Unnecessary Probate
Most estates should not require a Probate. Probate essentially means that a Court is supervising the administration and transfer of a person’s assets after they die. However most people’s estates do end up in probate because their assets were not titled correctly or their estate plan was not properly set up. This results in an unnecessary expense and delays for the family of the deceased person. Many people think that if they have a Will that they have “taken care of things”. In reality they have simply guaranteed that their family will have to go through the Probate process. Using a Trust and making sure that your assets are properly titled or “funded” in your Trust is a good way to avoid the need for Probate. I explain this in more detail on the audio C.D. provided in my Estate Planning Informational Packet.
Mistake 2: No Provision For Mental Disability
Most estate plans that I review do not provide any guidance for what a person wants, or does not want to happen, in the event that they become mentally incompetent before they die. This means that if that happens, the family of the incompetent person ends up in Probate Court to get a judge to make a determination and then to appoint a guardian and conservator for the mentally disabled person. This is another unnecessary expense for the person’s family, and it can be humiliating as well since it is a public proceeding. This can be avoided by making provision in your Trust in advance to address the issue of who decides if you are disabled, (i.e. a person you trust to do this) and then the type of care you want to receive if you are disabled. This way you can maintain control even when you have lost it!
Mistake 3: Your Property Ends Up In the Wrong Hands
There are many scenarios that I have seen over the years where a person’s property ends up with someone that they never intended. Many people’s estate plans simply say, ” when I die, I want everything to go to my spouse and then to my children in equal shares.” So, what happens when the surviving spouse remarries and then dies before her new spouse does? Many times it ends up with the new spouse, or even his children, rather than the original family members. Or, what happens if the second marriage ends in divorce? Many times half of it ends up with the second spouse. This is not what the decedent had in mind. What happens when a child inherits from her parents, and then gets divorced? Many times the inherited property gets commingled with the future ex-spouse and upon divorce, half of it goes outside of the deceased person’s family. These are just a few of the bad results that can be avoided with proper Trust planning. I discuss this in more detail on the audio C.D. provided in my Estate Planning Informational Packet.