3 Common Mistakes Made in Estate Planning
November 4, 2019
Estate planning isn’t an easy process to navigate on your own. If you don’t know what you’re doing, you could make mistakes that could end up costing you both time and money. Working with a reliable estate planning lawyer is your best course of action. Here are the most common mistakes people make that can be avoided when you choose to get help from a professional.
Mistake #1: Not Understanding the Estate Plan
Although an estate planner will take care of much of the heavy lifting in creating an estate plan that best suits the needs of you and your family, it’s important to not detach yourself from the process. Many people tend to leave everything to their planner and end up not understanding the documents they signed.
The right estate planner will take the time needed to explain the details of the plan to you in order to ensure you are aware of everything in it, as well as the steps that are vital for you to take once the plan is in place. Don’t be afraid to take notes at different stages of the planning process so that you can have a reminder of the key decisions you made and why you made them.
Mistake #2: Not Updating Beneficiary Designations
Contrary to what many assume, your Will does not change who will inherit accounts on which you have named a beneficiary. Most financial institutions have separate beneficiary designation forms that establish who will inherit certain assets directly as a beneficiary. Assets that can be inherited directly by a beneficiary include life insurance, retirement accounts, annuities, stock accounts, and bank accounts. These beneficiary designations should be coordinated with your Will to provide a complete estate plan. And if you have named a minor child as a beneficiary, there could be issues if you die before that child reaches legal age.
Estate planning is often done well in advance of your passing, so many years may go by between when you make your estate plan and when it goes into effect. Updating your plans is vital to ensuring that everything is carried out the way you want. We have all too often seen unintended consequences when named beneficiaries are ex-partners, deceased, minor children, people collecting governmental benefits, or other people that you might no longer want to inherit at the time of your death.
Mistake #3: Not Funding a Living Trust
Your living or revocable trust owns assets in order to avoid probate of those assets. Probate is the legal process where a will is proved and accepted as valid. If probate is necessary, it can be a long and costly process, delaying the time before assets can be distributed, and possibly subjecting the assets to creditors’ claims. A Trust can avoid the burden of probate on your heirs. However, in order for a Trust to avoid probate, that trust must be “funded”.
A Trust is funded when you will transfer the legal titles of your assets to the trust. For some assets, this can be done easily, with a phone call and some forms. For others, like real estate or automobiles, it can be more complicated. Too often the family does not realize that their relative’s Trust is unfunded until it is too late—and this is more likely to be the case if the Trust was gotten “off the internet” or through a company that just does “standard form” trusts, instead of an estate planning attorney. Failing to fund a living trust is a common mistake that can be avoided when you work with an experienced estate planning lawyer in Maryland.
Looking for an Estate Planning Lawyer in Carroll County?
DK Rus is a Maryland professional lawyer with over 25 years of experience in estate planning. She is dedicated to designing estate plans that meet all of her clients’ individual needs and ensuring each and every estate owner understands the process from beginning to end. Reach out today to request a free consultation for planning for your estate in Carroll County.
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