In 2008, prompted by the estimate that over 120 million Americans are without up-to-date estate plans to protect themselves or their families in the events of sickness, accidents or untimely death, Congress passed a resolution so recognizing the third week of October every year.
- Assigning Co-Trustees or Co-Executors
The best advice is to just have one trustee and one executor (usually the same person). List in order who your alternates will be. Many people think in fairness to all their kids they make them all responsible for administering the trust or estate. That is a really bad idea. It leads to a lot of arguments and can slow down the administration process.
If you have co-trustees and they don’t agree, who gets the final say? Your trustees could end up in court battling out even the simplest decisions.
Also, having two or more trustees means two or more people have to sign checks. Banks don’t want to monitor that and if you and the other trustees don’t all live nearby that is very complicated.
- Believing a Will is all you need to avoid loved ones going to court.
Probate is the legal process of administering a person’s estate both when they die intestate, meaning without a will, and when they die with one. Probate means “proving the will.”
Although a valid will can ultimately direct where assets are allocated, it will likely not avoid the probate process if there are assets titled solely in your name. The latest threshold for probate is $184,500. If your loved one passes with assets valued over that amount then yes, you are going to Probate. Most people’s houses here in California are valued at more than that.
- Being too vague about items with sentimental value
Generally, people give each of their kids an equal share. But that doesn’t necessarily leave the option available for kids to say ‘I want this specific item.’ Many people believe their kids will figure things out, and that they all get along. When people pass away, relationships change. Money changes people. Your children that got along so well when you were alive may not get along as well when you are gone.
Being specific about what items should go to who will avoid fighting.
- Forgetting to update documents to reflect life changes
The biggest mistake people make when it comes to their estate plans is their failure to update their documents when life events happen. There are certain life events that require the documents to be updated – marriage, divorce, births of children. It’s typically recommended that your estate plan be revisited every five to seven years.
Forgetting to update your documents after a life event could mean an ex-wife, who you don’t like, gets a share instead of someone else you care about. It could mean a new born child is left out. Then a spouse might need to go to court to have that child added. After life events, take a look at your documents and see if any updates or changes need to be made. Don’t hesitate or procrastinate.
- Not leaving instructions on where to find trust and will docs
Put your originals in a safe place. We do not recommend a safe deposit box. Once you are gone your trustee needs authority to get into that safe deposit box and the authority is in the documents locked in the box. That doesn’t really work.
Make sure you tell your successor trustee where those documents are, or at minimum, give them your attorney’s contact info. So if something happens, they can call the office. It makes it easier on your loved ones.
For those more tech-savvy people, scan and keep digital copies of your documents and tell your successor trustee where those files are and how to access them.
- Not working with an estate planning attorney
Estate planning is complicated and there are a lot of traps for the unwary, even unwary attorneys. Find someone who is a specialist, who knows how to navigate issues, and who you feel comfortable with. Do not have your CPA create your estate planning documents, or your financial advisor. Don’t let your divorce attorney prepare your estate planning documents. They may be great at dissolution, but estate planning may not be their area of expertise. Find an attorney specializing in estate planning.
- You don’t think through whether the gift you leave someone will actually help them at the time of your passing.
Another mistake that people make is not carefully considering the consequences of the bequests that they make. Yes, leaving people money is an empowering thing. But sometimes those same bequests can cause a lot of problems for the person receiving the gift. When leaving money to children, some consideration should be given to the child’s maturity and place in life. An 18-year-old may be a legal adult, but is probably not in a good place in life to receive an inheritance, even a relatively modest one. Receiving gifts outright might disqualify a college-aged person from financial aid. For those beneficiaries in their midlife, some consideration should be given to the risk of divorce, creditors or vices such as substance abuse or other addiction. You should also consider if a beneficiary is receiving government benefits, for example like disability. Receiving an inheritance could disrupt benefits for a special needs relative or loved one. In each of those cases, the inheritance you may have intended to benefit a friend or family member could wind up in the hands of someone else and/or not help your loved one at all — and maybe even hurt them.
- Gifting an Automobile and not leaving instructions where the title is (pink slip)
If you plan to give a family member, or friend a vehicle, make sure you put the pink slip in a place where it can be found. If a pink slip is lost replacing it could take a very long time. Depending on the situation, a new pink slip may not be so easy to request through the DMV. Registration for the vehicle may need to be paid, insurance may need to be updated and if there is a lien on the vehicle, that will need to be paid off. Once those things happen a new pink slip can be requested through the DMV. The DMV or the vehicle manufacturer may want copies of death certs, trusts docs, and driver licenses. Vehicle manufacturers have Probate departments to handle situations like this. If necessary, give that department a call and ask what documentation they need in order to request a duplicate title from them.
If you or someone you love needs an estate plan, or needs to update their current estate plan we are here to help. Give our office a call 818-887-9401