Apr 30, 2024

Life gives us chances to learn from our mistakes, but in estate planning, mistakes can't be undone. They can only serve as a warning for others. Errors in estate planning can be expensive, time consuming, and result in unfulfilled wishes. Proper estate planning ensures that your wishes are followed if you're unable to make decisions and after you pass away. Let's explore some common estate planning mistakes and ways to prevent them.

NOT HAVING A WILL OR TRUST

If you pass away without a will or trust, you won't have any control over how your assets are distributed. Instead, they will be distributed according to state law, which may not align with your wishes. This is especially problematic for blended families. Also, without proper planning or a Trust, your estate will be required to go through the probate process if the asset total is $50,000 or more. Having to deal with the court can be both time-consuming and costly. Additionally, the court will determine the guardian for your minor children, rather than allowing you to select the person you desire to raise them. Don’t make the mistake of assuming estate planning is not necessary for your situation.

NOT HAVING POWER OF ATTORNEY

If you become incapacitated and do not have a financial power of attorney, no one can manage your finances. This means no one can handle your real estate, business, or financial accounts. Without a healthcare power of attorney, your medical provider can only perform life-saving procedures. After stabilizing you, they cannot take any further action. To have someone make financial and medical decisions for you, your family must petition the court for a guardianship. This involves a mental evaluation, a Guardian Ad Litem, and court proceedings. The process can be costly, time-consuming, and may result in a professional guardian who is unfamiliar with your wishes. Don’t make the mistake of not having a power of attorney as part of your estate plan.

DO IT YOURSELF ESTATE PLAN

If you have a do-it-yourself estate plan, you run the risk of it having costly mistakes, being incomplete or even invalid. If your documents are not legally sound, they have no value. A well-prepared estate plan is tailored to you and your specific circumstances. Without legal expertise, it's easy to miss requirements or unintentionally go against your wishes. An estate planning attorney meets with you personally to discuss your circumstances and goals to determine the best structure for your estate plan. Your attorney will discuss all the necessary documents and explain their purpose. Don’t make the mistake of doing your estate planning without the guidance of an experienced attorney.

NOT PLANNING FOR SPECIAL NEEDS

Funds given directly to a beneficiary with special needs may disqualify them for government assistance. However, a Special Needs Trust helps those with disabilities receive their inheritance without risking their eligibility for governmental benefits like Medicaid or SSI. Funds from a special needs trust can be used for various needs such as education, recreation, physical rehabilitation, personal caregivers, and medical expenses not covered by assistance. The trustee is also allowed to buy assets in the name of the trust, so the assets do not count towards your loved one’s asset limit. Don’t make the mistake of failing to plan for your loved ones with special needs.

CONFLICTING BENEFICAIRY DESIGNATION & PROPERTY OWNERSHIP

Failure to review your beneficiary designations or property ownership can result in your assets being distributed in a way that does not align with your intentions. Assets that are held jointly or with beneficiaries, payable on death, and transfer on death designations will be transferred outright regardless of your estate plan. These methods are often used to bypass the probate process instead of using a Trust. Neglecting to review these matters can lead to discrepancies in your estate plan. It is crucial to verify that beneficiary designations and property titles align with your estate plan. Don’t make the mistake of having an inconsistent estate plan.

NOT FUNDING YOUR TRUST

Failure to properly fund your revocable trust may result in your estate having to go through probate. Your trust only has control over the assets that have been transferred into it. To fund your trust, you need to retitle assets such as bank accounts and real estate. Your estate planning attorney can help you with this process and will advise you to title new assets in the name of the trust. All assets that have been properly transferred into your revocable trust can avoid probate. Don’t make the mistake of failing to fund your trust.

NOT UPDATING YOUR ESTATE PLAN

Failure to review your estate plan for any necessary updates can result in an undesirable outcome. Whether years have gone by or there have been major life events, it is wise to review your estate plan and make sure everything is still how you want it to be. Situations and relationships change and loved ones pass away. Make sure you review your beneficiaries, personal representatives, trustees, guardians, and power of attorneys. By reviewing and making any necessary changes or amendments, you will ensure the accuracy of your estate plan. Don’t make the mistake of having an outdated estate plan.

FREE CONSULTATIONS

Unfortunately, these mistakes happen more often than you may think. It is essential for your estate plan to address asset disbursement, who will take care of your minor children, who will make healthcare and financial decisions on your behalf if you are unable to, directions for your end-of-life decisions, and asset ownership. Completing the appropriate estate planning documents is important; knowing that they are completed properly is imperative. Pedersen Law Office, LLC can help you have that peace of mind. We offer free consults to get to know you and your circumstances personally. Our law office serves the communities of Appleton, Neenah, Menasha, Oshkosh, Green Bay and their surrounding areas.