Five Common Mistakes Clients Make When Estate Planning

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Five Common Mistakes Clients Make When Estate Planning

Five Common Mistakes in Estate Planning

Estate planning is not a foreign concept.  Each person knows he or she will pass and that someone or entity will take possession of his or her items upon passing.  Planning for death is typically something individuals know they have to do.  How they go about creating an estate plan is another discussion.  We have looked at some of the mistakes individuals make in estate planning.  Some of these concepts are a great story or conversation in client discussions. 

1. Not planning at all

Some assume they don’t need legal documents because they “don’t have much.”  Enough said here.  Probate is one of the lousiest processes in settling an estate.  Yes, you don’t necessarily have to build legal documents, but you must have everything titled so it will seamlessly pass to another.  Not having a plan at all will create tremendous difficulties for the beneficiaries when their loved one passes. 

2. Establish the plan, yet not review it.

We evolve as people and just because you created a plan ten years ago doesn’t mean that it fits your current situation.  Plans don’t change automatically.  They need to be revisited every few years.  Relationships change, financial assets change, and sometimes new family members are added.  Beneficiaries pass or move on. All of these life events can affect an estate plan. 

3. Organizing your estate so others can find everything

How many times have we heard of someone organizing an estate in a file folder and leaving it in the top of their nightstand?  Then when something happens the entire family has to go digging through everything because they have no idea what their deceased loved one had.  This happens too often, and in a digital age it is even easier to organize your estate digitally.  Eventually, loved ones will need access and information to move on. 

4. Naming trustees or executor with consulting them first

Being a trustee or executor is not a privilege, it is a job.  There are many duties that come with the responsibility.  Just naming your oldest child is not good enough.  Those agents, executors or trustees need to know what is involved before they agree to be involved.  Often times, people don’t know they can name a fiduciary or company to oversee the transfer of an estate. 

5. Not properly funding a trust

Trusts are great for estate plans.  Trusts come with many benefits.  Where most trusts fail is when they are not funded properly.  We are not talking about depositing money into an account (although that could be an example.)  We are talking about titling those assets, so they are owned by the trust.  This includes not only liquid accounts, but homes, cars and other tangible assets.  Too many times, once the trust is created, it is assumed that it is good to go.

These mistakes can easily be avoided.  Maybe you can make the difference with a simple story or guiding them in the right direction.  Losing a loved one is hard enough.  Transitioning an estate that has issues only compounds the problem.  Mistakes happen but when you can rectify them before something happens, it can make all the difference.