Here are four more common Estate Planning mistakes we see in our Roseville Estate Planning Law

1 – Not Updating Plans

Everyone is busy, life can be hectic and complicated. We often must rush around putting out fires and don’t have time for things that don’t scream out for attention. The squeaky wheel does get the grease because you need the car to get to work!

When people have created an Estate Plan with a Revocable Living Trust, a Last Will and Testament, a Durable Power of Attorney and an Advanced Health Care Directive it is only natural to think, “Good that’s done” and don’t think about it again. This is a mistake. Our lives change constantly and a good Estate Plan should change with it.

Failing to update your Estate Plan can cause you and your loved ones serious problems. One of the most common is in the case of divorce. Leaving your ex-spouse listed as the beneficiary of your estate or as the successor Trustee or financial agent is easily seen as a bad thing.

Changing financial fortunes are all too common in this economy. When your estate is smaller than you imagined it would be when you created your Plan, your heirs can pay the price. Frequently people leave gifts of cash to named individuals in their Trust, friends, nieces and nephews or grandchildren. Commonly these gifts must be made prior to the main distribution of the Estate to the primary beneficiaries such as your spouse or children. If the assets of the Trust are exhausted by these initial amounts it is just too bad for the residual beneficiary. If the your financial situation changes it is a very good idea to update your Estate Planning documents as well.

2 –        DIY Estate Planning

The internet is full of free advice regarding everything and Estate Planning is no exception. Type a request for a Last Will and Testament template into any search engine and you will get thousands of results. There are good self-help sites and resources but not all are. Almost every client at some point will say something similar to “my estate plan is simple and basic, not complicated at all”. At the time the all believe this to be true. We believe that every person’s situation is unique. No cookie cutter documents will work for every family. A custom created Estate Plan is better than a $10 do it yourself Trust, it is true, but a $10 DIY Trust is better than no plan at all. So if the choice is no Plan or a very inexpensive DIY Plan then we vote for the DIY plan, but if you want a Plan that will be tailored to your life give us a call.


3 – Leaving Assets outright to Beneficiaries

This mistake is not only very common but is also not seen as a mistake by most people. After all the purpose of a beneficiary designation is to direct that the asset is given directly to the heir. Life insurance, bank accounts, IRA’s, all of these assets require a beneficiary be listed in case the owner dies, so that the company knows who is entitled to the funds.

How can a lump sum of cash be bad for anyone? You are asking yourself this question. The answer is as easy as this and is another question. Do you think it is a good idea to leave a 19 year old a large sum of money? What do you think will happen? Everyone knows the answer; the money will be wasted in short order. If an heir is disabled and is receiving needs based Social Security benefits and inherits some money, the benefits could stop. Heirs with dependency problems rarely are helped by large amounts of cash. There are numerous other examples.

A good Estate Plan allows you to leave money to these types of heirs without harming them. You can name someone responsible to be in charge of the estate. This person can use the funds for the benefit of your loved ones without causing the problems discussed above.


4 – Not planning for disability

No one wants to contemplate the possibility of disaster befalling them or a loved one. We all seem to believe that we can cause bad things to happen because we thought about them. When most people think about Estate Planning it is in regard to their own death. That is part of any good estate plan, but not all of it. We all need to think about what would happen if we became incapacitated temporary or permanently. In order for someone to handle your affairs if you can’t without a court order, you need a Durable Power of Attorney and an Advanced Health Care Directive.

Financial affairs are covered by the Durable Power of Attorney and medical decisions covered by the Advanced Health Care Directive (also called a Living Will). Even if you have no assets or dependents you should get a Health Care Directive. No one knows what the future holds and life happens to everyone, usually all over them when they aren’t looking. A little bit of planning can go a long way.