When engaging in the estate planning process, you need to be aware of the consequences of making a mistake. By not relying on an estate planning attorney to help guide you through the complexities of the process, you become more prone to making a mistake that your loved ones have to deal with after you die.
With the emotional toll of your death weighing on your loved ones, you do not want to exacerbate the experience with estate planning roadblocks that may impede your wishes from becoming realized in a timely manner.
Moderator Scott Trout hosted “5 Worst Estate Planning Mistakes: TuckerAllen Town Hall,” a roundtable discussion featuring TuckerAllen attorneys, discussing some of the most common missteps that you may make during the estate planning process and ways of avoiding them.
The problems with privacy
One of the most common errors that people make when addressing their estate planning needs is keeping the process private. While there are many details that you may wish to not disclose, where your estate plans are located and who is given what proxy, in the event of incapacitation, are not among them.
“If you don’t tell the people who are going to use your estate plan about your estate plan, then what’s the point?” TuckerAllen attorney Teresa Yao said. “You have to feel comfortable with who you appoint as trustees, those who are personal representatives in your will, and certainly your Powers of Attorney. These are agents that are acting for you and need to know.”
You may be like many who view their estate plan as an accomplishment that is kept in a safe and never addressed again. In order for your plan to fully be realized, you have to take an active approach, while you are able to do so. That starts with having conversations.
“Make sure that all of the people that you are naming actually accept that responsibility and understand what you are putting on them,” Ms. Yao said.
Choosing the wrong person
This requires a fundamental of understanding of those in your life that would be best equipped to handle the individual tasks asked of them by your estate plan. You need to know who would best represent your wishes and take on the responsibility of making decisions on your behalf, if you are unable to do so yourself.
“You have to choose the right person for the individual role,” TuckerAllen attorney Missy Shands Manning said. “These people have a ton of power over your finances and your person, if something happens to you, so we want to make certain that they are absolutely 100 percent trustworthy.”
Ms. Shands Manning highlighted why it was important for you to select someone that exhibits the following qualities or factors:
- Good financial sense or similar values
“Ask yourself ‘Do you trust them to do this right now?’ and if the answer is no, then they should be put down as an agent on any estate planning document,” Ms. Shands Manning said.
Updating your estate plan
With the passage of time, circumstances in your life change. You may have begun the estate planning process when you were younger and now are married, have children, or have acquired significant assets that you previously did not have. These need to be accounted for in your estate planning documents.
“A common problem that we see is people assume that upon their death, their spouse is going to receive their assets without having a will or a trust in place,” TuckerAllen attorney Kevin Mason said. “That just isn’t the case. It can lead to some very sticky situations.
“If you have children later in life, or you have a child, and they have a child, you may want your estate planning documents to account for them. Instead of leaving your estate plans the way that they are, you may want to make the necessary changes.”
Funding your trust
Even if your estate planning documents have been created, they may not have been funded. By not funding a trust, you are leaving your assets and your loved ones vulnerable to the time and costs associated with the probate process.
“Funding is the process of making sure that your assets are controlled by your trust upon your death,” Ms. Shands Manning said. “We like to make certain that all of your assets are owned by the trust outright, or upon your death, they are transferred automatically and instantaneously.”
Having documents in place
Keeping your assets safe and setting up a plan for the future is a crucial part of estate planning. If you put off creating these documents, you leave yourself vulnerable if you become incapacitated or die.
Depending on the estate planning document needed and unaccounted for, there are different layers of complications that your loved ones will have to face, in order to make the necessary decisions on your behalf.
“If you do not have a health care Power of Attorney, the doctor will look to whatever answers he or she can get at that time, in order to make the best decision that they can possibly make” Ms. Yao said. “If you do not have a financial Power of Attorney and you become incapacitated, and for example, your child needs to step in and help you out, then that child will have to go through a guardianship process. Somebody has to be appointed as a guardian or conservator, which can be a very arduous process.
“If you don’t have a will, then essentially you are leaving your graces up to the state, in order to figure out what to do with your assets. You don’t have any say in who is determined to be the personal representative or executor appointed to handle any assets that have to go through probate. You also don’t have any control as to how your assets will be divvied up.”
By creating the necessary estate planning documents, relying on the experience of your estate planning attorney, and having important conversations about your estate plan with your loved ones, you can feel secure, knowing that you will have avoided any missteps. You can feel confident in your plans for the future.