#24 of 25 Estate Planning Mistakes – Not Reading

Not Reading Actual Estate Plan Legal Documents
The only way to be certain that your trust, will, powers of attorney and advanced directive do what you want is to read the actual documents. If you don’t understand something, you can seek an explanation from your attorney. If you need to make a change, you can amend the document. Additionally, how can you explain your estate plan to your successor trustee, personal representative
and family if you have never read it?

#23 of 25 Estate Planning Mistakes – Financial

Failing to Conduct Adequate Financial Planning
A well-drafted estate plan can fail if no assets remain to be managed or distributed. An often-forgotten part of estate planning is financial planning to make sure sufficient income and assets are available to meet your lifetime needs. Your plan needs to include guaranteed sources of lifetime income to meet your living expenses. In addition to living expenses, your financial plan needs to address things like home repairs, medical care and health insurance. You need to plan to leverage your existing assets to cover the expense of long-term care. For married couples, it needs to address the replacement of any income lost at death of first spouse.

#22 of 25 Estate Planning Mistakes – Coordinate

Not Coordinating Financial Accounts with Legal Documents
When talking about estate planning, many people only consider legal documents like wills, trusts and powers of attorney. However, estate plans consist of two separate, but related, components: legal documents and financial accounts. The distribution provisions in these components must be coordinated, meaning that both reflect the same goal for the management and distribution of assets. In many estates, the value of the financial accounts will be a substantial fraction of the estate’s value. Many of these accounts, like retirement accounts, annuities and life insurance, have beneficiary designations so they do not pass under either a will or trust. As a result, these beneficiary designations need to be coordinated with the asset distribution provisions of the will or trust, so that the overall asset distribution matches your intended goals.

#21 of 25 Estate Planning Mistakes – Equality

Treating Beneficiaries Equally, Instead of Fairly
Many parents feel obligated to divide their estate equally among their children. And most children feel they should be treated equally. However, this type of equal distribution at death can be unfair for a number of reasons. The children may have substantially different financial means. The parents may have provided more for one child than the others. One child may have provided more care or service than another. If parents do decide to provide for an unequal distribution, it’s important that they discuss that decision with their children to avoid any hurt feelings, and expensive litigation, after their passing.

#20 of 25 Estate Planning Mistakes – Blended Family

Using a Traditional Estate Plan for a Blended Family
Your estate plan needs to be suitable for your family. Yet, as reflected in state intestacy laws, “default” estate planning has a clear bias towards traditional families. For example, estate plans for married couples, especially online “do-it-yourself-kits” often follow the “all to spouse” model at the death of first spouse. However, as more and more families are becoming more complicated, including children from prior relationships, separate assets and other differences, often make that kind of an estate plan a poor fit. By working with an experienced estate planning attorney, your plan can be drafted to fit the actual composition of your family.

#19 of 25 Estate Planning Mistakes – Children on Deeds

Putting Child’s name on Deed
A common estate planning method, and a potentially costly  mistake, is adding your children to the deed on your home as co-owners with rights of survivorship. While this step will avoid probate, it also has adverse tax consequences. Since your children received part of the home’s value as a gift, they will owe more capital gains taxes on its sale than if they had received it as an inheritance. Your home also becomes exposed to the debts and liabilities of the new co-owner, your son or daughter, including those caused by a divorce. In some states, creditors can force the sale of the home to get the child’s share.

#18 of 25 Estate Planning Mistakes – End of Life

Failing to Plan for End-of-Life Issues

End of Life Planning is needed so that you retain control of your person. One of the fears shared by many people is a slow death with their life being artificially and mechanically prolonged following an accident or other medical issue. You can avoid this fate with proper planning. The default treatment for medical professionals is to provide the necessary treatment to keep the patient alive, even if recovery is not possible. Part of estate planning, regardless of age, is to plan for your health care and medical treatment at the end of your life, when you are no longer able to communicate your wishes. You need to decide and communicate what treatment you want (and don’t want) to receive when you reach the end of your life, prior to those plans being needed.

#17 of 25 Estate Planning Mistakes Long Term Care

Failing to Plan for Long Term Care
As people live longer, the number of people who spend some time in a nursing home continues to increase. With costs nearing $100,00 per year, a nursing home stay can
destroy your estate and financial plan. Yet many people fail to plan for this increasingly likely event. The result is that you will be forced to use almost all of your assets to pay for your nursing home care until you qualify for Medicaid (usually referred to as Medicaid spend down). A number of financial planning options exist to leverage your financial resources to cover your long-term care expenses. Several estate planning options also exist to protect assets from Medicaid spend down.

#16 of 25 Common Estate Planning Mistakes – Irrevocable

Failing to Consider Using an Irrevocable Trust
Revocable living trusts are designed to avoid probate. They can also eliminate the need to have a guardian appointed if you become incapacitated. They do not, however, protect assets from creditors or shield them from the Medicaid spend down process. Irrevocable trusts, however, if properly drafted and funded, can do both. If either of those objectives are part of your estate planning goals, you should speak with an experienced estate planning / elder law attorney about adding an irrevocable trust to your estate plan.

#15 of 25 Common Estate Planning Mistakes – Pets

Forgetting About Man’s Best Friend
Your estate plan can include provisions for your pet. Sadly, many pets end up living out their lives in shelters after their owner’s death because no plan was in place. You can plan for your pet by designating someone who will have custody and providing them with financial support to pay for the pet’s food and veterinary care. In many states, your plan can include a separate “pet trust” to provide financial support for your pet after your incapacity or death. Planning for a pet is especially important if you have an exotic or unusual pet.