Estate planning is easy to put off. It can be frightening to talk about plans surrounding death, old age, and a potential disability. But sadly, this unwillingness to face reality sooner rather than later can often create serious hardship for you and your loved ones.
Without a thorough understanding of how the legal process works upon your death or incapacity, you’ll likely make serious mistakes when creating a will or trust. And the worst part is that these mistakes typically aren’t discovered until you are gone.
Below are some of the most common estate planning mistakes, starting with the worst of all: failing to create an estate plan.
1. If you die without an estate plan, the court will decide who inherits your assets and decide who is entitled to your property. It’s important to note that state intestacy laws only apply to blood relatives, so unmarried partners and close friends would get nothing. If you want someone outside of your family to inherit your assets, having a plan is an absolute must.
2. Lots of people, particularly older folks, believe that a will is the only estate planning tool they need. While a will is a fundamental part of nearly every adult’s estate plan, that can ensure that your assets go where you want them to go in the event of your death. But using a will by itself comes with some serious limitations. A will requires your family to go through the court process known as probate, which can be lengthy and expensive. It’s also important to note that wills don’t offer you any protection if become incapacitated by illness or injury and are unable to make your own medical, financial, and legal decisions.
3. Many people now know that a trust can keep your family out of court, but you have to ensure that you’re adhering to all the requirements of the law in your particular state. It’s important that your trust is a trust that exists and it’s properly funded. A trust that exists but doesn’t hold any of your assets because you didn’t retitle them properly, is all too common and can leave your family in a big mess. Funding your trust properly is extremely important because if any assets are not properly funded, the trust won’t work, AND your family will have to go to court in order to take ownership of that property. In light of these facts, if your estate plan includes a trust, it’s critical to work with us at Truest Law to ensure that your plan works exactly as you intended.
4. Because we know that there is more than $1.8 billion dollars worth of lost assets in Arizona’s Department of Unclaimed Property, we also know that funding your assets into your trust can be difficult. Keeping your asset inventory up to date is essential to securing your family’s safety in the future. At Trust Law, we offer a unique comprehensive asset inventory system where we help you create a clear inventory and we have systems in place to make sure that inventory stys updated throughout your lifetime.
5. In addition to keeping an updated asset inventory, it’s vital that you regularly review and update all of your planning documents. Far too often people prepare a will or trust , then put it into a drawer or on a shelf, and forget about it. Yet, an estate plan is not a one-and-done deal. As time passes, your life circumstances change, the laws change, and your assets change, you must update your plan to reflect these changes—that is, if you want your plan to actually work for your loved ones and keep them out of court and conflict.
Next week, in part two, we’ll wrap up our list of the 10 most common estate-planning mistakes. Until then, if you are ready to get your estate planning handled and taken care of the right way with ease and affordability, start by contacting us, Truest Law for a Family Wealth Planning Session.