Top 5 Estate Planning Mistakes
Your life’s work and ability to provide for your family provide a gratifying feeling for you and your heirs. However, such planning can go awry when last-minute changes occur. The following are common estate planning errors.
#1—Leaving money to someone while you are alive but not changing your will. Frequently people include cash gifts in their will. For instance, a favorite nephew may inherit $50,000, a childhood friend $100,000, even a housekeeper may receive $10,000 for loyal service. It is quite common when family members meet after a loved one has passed to hear that the deceased has already gifted these cash amounts.
The mistake is that the gift is given, yet your will reflects the named individual should be given what has already been received and may still award the individual named the cash amount (an additional gift).
#2—Insufficient assets are funding your trust. You may have created your trust years ago, and its assets may have decreased in value and be insufficient to cover costs of the gifts associated with your trust. Your intentions in creating the trust can evaporate, leaving inheritors short-changed or receiving nothing at all without proper preservation of the trust’s assets.
Remember the rule that cash gifts are paid first. For example, if you leave your sister one million dollars and the rest in trust to your children, and you die with assets totaling $1,100,000, your sister will receive her cash outright while only $100,000 will remain in trust for your children.
#3—All assets do not pass through your will. You must understand the difference between probate and non-probate assets. Non-probate assets often pass as a beneficiary designation or joint ownership outside of a will.
#4—You are adding joint owners on accounts or real estate. Joint ownership can seem like a simple planning solution. However, adding a joint owner can create serious problems such as exposure to the joint owner’s liabilities (i.e., car accident, creditors, etc.).
#5—Changes to your beneficiary designations. If you change beneficiaries without speaking to your estate planning attorney, you can create all sorts of unintended results.
If you want to change your estate plan, it is imperative to do so under the advice of an Estate Planning/Elder Law Attorney (preferably one that is board certified). Reviewing your documents will ensure that desired changes produce the effective outcome.
Jason A. Penrod is only the 20th attorney to be Board Certified as an Elder Law Expert by the Florida Bar and the National Elder Law Foundation. He is the founder of Family Elder Law (www.familyelderlaw.com) which has offices in Lakeland, Lake Wales, and Sebring, Florida.