A Dozen Mistakes to Avoid in Estate Planning

# 1 Mistake: Failing to Address Health Care Decisions

  • No addressing health care decisions can create conflict among family, guilt, no directions, cause delay, and unexpected costs.
  • An Advanced Directive can identify the decision-makers you want, can provide for end of life directives, and makes clear statements of intent to your loved ones.

#2 Mistake: No Plan to Control Financial & Property Matters During Incapacity

  • Without appropriate legal documents to manage your assets during incapacity, a court supervised “conservatorship” is probably inescapable.
  • No plan creates time consuming problems that are expensive, cumbersome, emotionally trying, and is public record.
  • Avoid a conservatorship during your incapacity with by establishing a Trust.  A trust allows you to appoint a trustee to manage your financial affairs and thus can avoid the need for an appointment of a conservator.
  • Avoid a conservatorship with a Durable Power of Attorney.  An individual can delegate the agent the power to make financial transactions on their behalf if they are unable to do so themselves. 
  • Powers of Attorney should be well-thought out in order to be effective, productive, and achieve the principal’s overall objectives.
  • Provisions that are often left out without careful drafting are: power to sell home, care for pets, power to fund trusts, and powers regarding U.S. mail.

#3 Mistake: No Wealth Transfer Strategy

  • A Wealth Transfer Plan is tailored to the assets you own.
  • It accounts for your unique family situation and is designed to streamline transfer of your assets quickly and cost effectively.
  • A Living Trust holds and passes assets without probate, provides for asset management, and deals with disability and death. 

#4 Mistake: Failure to Understand & Plan for Death Taxes

  • You may be surprised how big your estate is.  It includes your home, retirement plans, life insurance, real estate, investment accounts, autos, boats, RVs, furnishings, collections, and personal effects.
  • With appropriate tax planning in your estate plan, you can avoid losing money planned for loved ones to the federal government at your death.

#5 Mistake: Thinking Children – Minor and Adult – Don’t Need Inheritance Protection

  • What if your child becomes instantly “rich” at age 18? Or suffers a divorce?  Experiences creditor problems? Or gets sued?
  • A Trust can protect your child’s inheritance.  The adult child becomes co-trustee or eventually trustee of their trust.  The child has significant access to income and principal and there are few strings attached.
  • The benefit of a children’s trust is to protect inheritance from future divorces, from lawsuits, bankruptcy, personal injury claims, IRS, etc.  You can also protect your child from spend-thrifting.

#6 Mistake: Failing to Transfer Values

  • Traditional estate plans mainly focus on transferring assets, reducing taxes, and administration costs.
  • A comprehensive estate plan adds ethical wills, incentive trusts, involves children in the process.

#7 Mistake: Not Preserving Tax Deferral Benefits of Retirement Plans

  • Most of your retirement account could be subject to immediate taxation on death.
  • The longer your beneficiaries can keep funds in an IRA after death, the more wealth they can create.
  • Find out if your IRA can be stretched to prolong ownership.
  • An IRA Legacy Trust can protect and increase wealth by keeping funds in a tax-protected IRA as long as possible.
  • There is a huge loss when your IRA is cashed out early and spent.
  • An IRA Legacy Trust is revocable, established now by the IRA owner, is the beneficiary of the IRA at Owner’s death, and is separate from your Living Trust.

#8 Mistake: Failing to Organize and Consolidate

  • Without organization estate administration can cause delays and increased costs.
  • There may be a lack of communication, inability to locate assets, redundant accounts, or no central repository.
  • Be organized with an estate planning portfolio repository, consolidate your accounts, had have emergency document access.

#9 Mistake: In Second Marriages, Failing to Protect Your Souse, and Your Kids

  • Problems with living your money to your surviving spouse can be a problem if that spouse is a spend-thrift effectively disinheriting your children, or your spouse is victimized by a gold-digger decimating your estate.
  • There are solutions with proper estate planning.  A trust can pass the inheritance to your spouse and your children instead of spouse’s new spouse or your son-in-law or daughter-in-law. 
  • A trust can provide income and principal to your spouse for life in accordance with their needs.  Then income goes to your children per your choice.

#10 Mistake: Failing to Plan for Tangible Personal Property

  • The most common fights after your death is regarding your tangible personal property, sentimental items, reminders, photos, jewelry, artwork, collectibles
  • A solution is to create clear communication and a clearly articulated process for your property.

#11 Mistake: Access to Medical Records

  • Don’t fail to plan for HIPAA, which locks down private health care information. 
  • Medical personnel face stiff penalties and are reluctant to provide family members access. 
  • A special HIPPA authorization ensures access to medical information.

#12 Mistake: Believing Estate Planning is a “One-Time Event”

  • Estate planning is a lifetime process.
  • There may be personal and legal changes that occur, requiring updates to your plan.
  • Lasting relationships are key, and making sure your plan grows with you.

We offer a full Wills and Trusts package with fee ranges to suit your individual needs and investment and a free consultation to determine if we can help you meet your goals.  Contact attorney Feliz Martone to begin your unique plan.