While many people set out to craft air-tight estate plans to be followed in the event of their passing, the entire process is filled with pitfalls that can limit a plan’s effectiveness. A recent article regarding estate planning discusses some of these mistakes and the different ways that a person might avoid them.
One key mistake is choosing the wrong people when deciding who should carry out the plan. A person setting out their plans for their estate should make sure that the chosen executor is mentally and emotionally capable of making the more difficult decisions that are included in his or her duties. It is also important to keep beneficiary information in both the estate plan and in IRA, 401k, and insurance benefit documents up to date. Checking that information frequently and adding or removing beneficiaries when necessary might the administration of the estate go more smoothly.
It might also be a good idea to select alternate beneficiaries. When these contingent individuals are chosen, it might help ensure that the assets held in the estate are awarded to a person rather than given to the state if the primary recipients are incapable of or unwilling to take any inheritance left to them. In addition, it might be beneficial to confirm that those appointed to execute and benefit from the estate have the best interests of everyone involved at heart. This can help avoid conflict and legal intervention down the road.
While avoiding these mistakes might have a positive influence on the estate planning process, these are only some of the common mistakes that a person might make when drafting a will. An attorney who is familiar with estate planning strategies might be able to help a client build an effective plan.
Source: Investing Daily, “Key Estate Planning Mistakes You Need to Avoid“, Bob Carlson, July 24, 2014
California residents who were fans of late musician Lou Reed may be interested to learn how the ‘Walk on the Wild Side” singer handled his estate planning. According to a report filed by one of the two co-executors of Reed’s estate, a 34-page will Reed drew up in April 2012 was all the estate planning he had done before he passed.
Because Reed relied on a will rather than a revocable living trust, the details of how Reed’s estate was divided has become public knowledge. While his $30 million estate was dispersed, Reed’s family members were required to go through probate court. The media quickly discovered that Reed’s wife was left with 75 percent of his estate and Reed’s sister was left with 25 percent of his estate.
In addition to becoming public, wills that have to go through probate court can result in added expenses and headaches for a deceased person’s surviving family members. If one family member objects to an aspect of the will, it’s relatively easy to challenge the will in probate court. A revocable living trust, however, will ensure that the contents of an estate are dispersed privately without every beneficiary knowing exactly who got what.
A person who would like the added privacy and security of a revocable living trust may wish to consult an estate planning attorney. The attorney could help design a revocable living trust that will ensure that the person’s estate is dispersed quickly and privately after he or she passes. While writing a comprehensive trust document, the attorney may also be able to help individuals to add detailed conditions and limitations to the dispersal of their assets.
Source: Forbes, “Lou Reed Walked On The Wild Side With His Estate Planning“, July 10, 2014
Estate planning is more than a one-time event in which a person writes a will and gives a power of attorney to a trusted relative or friend. To be most effective, California individuals should review their estate plan on an annual basis to ensure that the decisions they made when they signed the documents are still in line with their current wishes. There are a few times in a person’s life that it is important to review an estate plan and make necessary changes.
An estate plan should always be reviewed when a close family member who was listed as a beneficiary, trustee or representative dies or when someone becomes unable to perform the duties required of them. It’s important to have trusted family members or friends who are willing and able to serve as executor and under a power of attorney.
A person may want to consider revising their estate plan when they get divorced. Failing to revise a health care or financial power of attorney can leave someone’s former spouse or former in-laws in charge of important decisions. By reviewing the documents regularly and especially after important life events, a will and power of attorney designations can remain current.
Taking the time to review these legal forms can ensure that a person’s wishes are carried out as they would have done themselves if they were able. If it is ever necessary to change documents to appoint a new executor or trustee, an attorney who focuses on estate planning may be able to help a client make the adjustments and explain to the newly designated representatives what their role will be in the event the client dies or becomes incapacitated.
Source: Explorer News, “Six reasons to take a fresh look at your estate plan“, June 25, 2014