Estate Planning Mistakes

Avoid These Costly Estate Planning Mistakes!

 

 

Why work hard to build wealth only to have your wishes thwarted or your family left with much less than you anticipated? From wills to trusts and beyond, protect your loved ones by avoiding these four costly but common estate-planning mistakes:

 

 

Forgoing an expert’s review.

 

There’s nothing wrong with saving a few bucks by drafting your own estate-planning documents. You can find templates for basic wills and such online or in bookstores. It’s a good idea to also invest in a review of the final documents by an expert to be sure everything is in order.

“Ninety percent of the online estate-planning documents I see don’t do what the people think they’re going to do,” says Leanna Hamill, an estate planner and elder law attorney in Hingham, Mass. “I’ve seen people use online documents, documents out of estate-planning books or documents borrowed from friends. But they screw up their estate plan because they don’t understand the legal and technical aspects of the documents.”

Common mistakes Hamill has seen? One client signed a deed transferring his house to a trust but hadn’t properly created the trust. Thus, the deed had no effect. Another client’s confusion over the term “beneficiary” resulted in the immediate transfer of all his property to his children and required him to pay them an annual income, leaving his wife in the cold.

 

 

Failing to tie your business to your estate plan

 

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If you own a business, include it in your estate plan. “Parents sometimes don’t want to talk to their kids about it and just leave the business to the kids,” says Steve Ciepiela, president and owner of Charles Stephen & Co., a financial planning firm in Albuquerque, N.M. “That’s a huge mistake.”

A typical conundrum is how to provide equally for children who work in the family business and those who don’t. Ciepiela had hounded a couple with five children to do estate planning that covered their business. But they stuck with simple wills and died within five months of each other. At a family meeting after the parents’ deaths, three children not working in the business wanted to know how much income they’d begin getting from the business. The two brothers who worked in the business contended they had to sell it to pay estate taxes.

The business was shut down and sold at a huge discount. The two brothers opened a new, but less successful, business, recalls Ciepiela. All of that could have been avoided if the parents had bought life insurance to cover estate taxes or equalize the distribution to children who didn’t work in the business.

 

 

Leaving lump sums

 

If you have money to leave behind, be sure it makes a difference in your family members’ lives by leaving it in a trust, rather than cash. Donald A. DeLong, an estate, business and tax-planning lawyer in Southfield, Mich., witnessed one case in which a father left $250,000 to his heroin-addicted son, who was penniless six months later.

“He did his own will,” says DeLong. “He knew the problems his son had with drugs because his son lived with him. I think he just wasn’t aware he had other options. A trust was probably his best option, because it’s the best way to protect people from themselves.”

With a trust, you transfer property to a trustee, who is bound by a trust agreement. The trust agreement stipulates how you want the property distributed. So rather than giving property outright to a beneficiary, the trustee holds your property and doles it out per your instructions. It’s an added layer of protection.

The most common types of trusts  — revocable living trust  and irrevocable trusts  —  can contain so-called spendthrift provisions. “A spendthrift provision prevents the beneficiary from getting advances against or trying to get a loan using his interest in the trust as collateral,” says DeLong. “It also leaves the beneficiary’s creditors in the cold because the beneficiary has no control over or access to the trust funds in the trust.”

 

 

Neglecting to update your estate plan

 

Each time the law or your family changes, revisit your estate plan. The all-time record for an out-of-date estate plan may go to a couple who not long ago came to Everett Sussman, an estate-planning attorney in Stratford, Conn. “They said they’d done their wills when their kids were young — that was in September 1957,” says Sussman. “Legally, those documents were valid, but they’d have been worth nothing at all. The couple no longer needed guardians for their children, who now have adult children of their own. Their assets were wildly different, and the executor they’d chosen had died many years earlier.”

Changes can also require alterations in not-so-old estate plans. Sussman is in the process of “fixing” the estate of a woman who split her assets between her daughter and granddaughter. But when she died, her daughter was again pregnant. “The grandmother didn’t update her will when she found out her daughter was going to have a second child because she probably thought her attorney drafted it properly to accommodate for later-born children,” says Sussman. “I was brought in to overturn the estate so half would be split among the grandchildren. Had there been feuding children, we never would have accomplished this because the will was valid on its face.”

If you would like to see how to prepare a trust inexpensively online, I recommend Law Depot for simple do-it-yourself legal document preparation.  You can always have an expert check it over for a small fee, and you can make changes to your document any time.  My husband and I prepared out wills with Law Depot, and it was very straightforward.

 

Thanks for visiting and reading …

I hope this article provided you some helpful ideas.  I welcome your comments below.

-Laurie

 

 

 

You may also be interested in:

Cost Effective Wills

What You Need to Know About Writing a Will

 

 

Make A Living Will Today

What is a Living Will or Healthcare Directive

And  Do You Need One?

http://www.lawdepot.ca/contracts/living-will-personal-directive/?pid=pg-R4A3Y9OYQP-living-will-personal-directivetextlink&ldcn=healthdir&loc=CA

 

Prepare for unforeseen circumstances to save yourself and your family needless pain.

We have all heard stories of people who, because of a terrible accident or illness, become unable to make health care decisions for themselves. It may happen gradually, when someone develops dementia, for example. If he or she did not previously designate another person to do so, the matter can end up in the courts.

Having a health care power of attorney  is the best way to make sure that your wishes are followed and that you receive the level of care you choose.

In this video by Milwaukee Public Television, attorney Betsy Abramson, deputy director of the Wisconsin Institute for Healthy Aging, offers pointers on how you can put your mind at ease by filling out the vital paperwork.

 

Living Will states your wishes regarding life support in the event that you cannot communicate your end-of-life wishes yourself. Your Living Will only comes into effect if you are in a persistent vegetative state or irreversible coma and can no longer make and communicate your own wishes. A Living Will spares your family the anguish of making life-support decisions without your input. A Living Will also ensures that your doctor understands your end-of-life wishes and treats you accordingly.

Living Wills can be very specific or very general. Living Wills that are too general may not provide sufficient direction and serve only to create confusion and conflict between medical personnel, your health care agent, and your loved ones. More specific Living Wills are preferred. These are shown to be most successful when they include informed, thoughtful reflection on your wishes and values supported by personal communication between you and your health care agent before a medical crisis occurs.

Recently, Living Wills have moved away from focusing on specific treatments and medical procedures to focus on patient values, personal goals, and health outcome states. For example, a Living Will might: designate an agent to make care decisions; dictate what kind of life support treatment that patient does or does not want; discuss pain management, personal grooming and bathing instructions; address how the patient wants to be treated, including religious, spiritual, and emotional support; and detail funeral or memorial plans.

Choosing an Agent for Your Living Will

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When you become unable to make medical decisions for yourself, the power to make life-support decisions for you is transferred to the person you designate as your agent in your Living Will or Health Care Power of Attorney. 

This person must act according to the directives set out in that document. The person that you designate as your agent should be someone you know and trust. Some states refer to the agent as an “attorney-in-fact,” “health care agent,” “health care proxy,” “health care representative,” “patient advocate,” “proxy” or “surrogate.”

The statutes of most states require that your agent be an adult. In addition, under most circumstances, your agent cannot be your health care provider (for example, a physician, nurse, employee, officer, director, or operator of a home health agency, hospital, nursing home, or residential care facility) unless that person is related to you. In selecting an agent for your Living Will, you should not designate a person who is, or may become, directly involved in providing health care to you unless that person is your spouse or a family member.

Make sure your agent is willing to assume responsibility for your medical decision making. If she agrees to be your proxy, talk with her about your values, beliefs and desires. Good health care agents are able to separate their own feelings from yours and your wishes, but may feel guilt and anguish at having to make such difficult end-of-life decisions. Communicating early and often with your agent can help ensure that both you and your agent are comfortable and at peace with your life-support wishes.

http://www.lawdepot.ca/contracts/living-will-personal-directive/?pid=pg-R4A3Y9OYQP-living-will-personal-directivetextlink&ldcn=healthdir&loc=CA

Choose just one person to serve as your agent at a given time to avoid conflicts. But choose an alternate agent in case the primary agent is not available. Once you have selected an agent, make sure they get a copy of your Living Will, and tell your family and physician whom you’ve selected.

Many individuals give their health care agents broad authority to override their written Living Will. Other individuals give the written Living Will priority. Make sure to articulate which instruction to follow when there is a conflict between your agent and your Living Will.

 

Summary For Americans:

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Create your US Citizen Living Will today.  Call your lawyer or prepare one simply and inexpensively yourself online at Law Depot.

What is a Living Will?

A Living Will lets you specify your choices for medical treatment. A Living Will documents your preferences for the time when you are no longer able to communicate or provide consent.

What is a Medical Power of Attorney?

A Medical Power of Attorney allows you to designate someone (your Agent) to make health care decisions for you when you are no longer able to do so.

What are my rights?

If you have a Living Will, the decisions made by your Agent will be constrained by that document. The Medical Power of Attorney is useful for those issues that are not covered by your Living Will. In those cases, your Agent can ensure the intent of your wishes are followed.

The U.S. Constitution allows people to determine the kind of health care they will receive. However, many states limit the types of health care decisions that can be made, and the instructions that you provide below may go beyond what is allowed in your state. This will not invalidate your instructions, but your health care providers may be limited to what is legally permitted.

 

Summary For Canadians:

http://www.ctvnews.ca/polopoly_fs/1.2237377.1424029075!/httpImage/image.jpg_gen/derivatives/landscape_960/image.jpg

Create your Canadian Citizen Living Will today.  Call your lawyer, or prepare one inexpensively yourself online at Law Depot.

What is a Representation Agreement?

A Personal Directive or Living Will allows you to designate someone who will make health care and personal care decisions for you when you are not able and also to provide instructions for future care while you are still capable of making decisions for yourself.  A Personal Directive provides an opportunity for you to discuss treatment options with your medical staff as well as to discuss and resolve difficult issues with your family and friends.  Your directive must be made while you are still capable of giving consent.  Note that a Personal Directive is also called a Living Will, Advance Directive, Health Care Directive, or Power of Attorney for personal care.

Every adult who is 19 years of age or older is presumed to be capable of making, changing or revoking a representation agreement, and making decisions about personal care, health care and legal matters and about the adult’s financial affairs, business and assets.In addition the following will apply:

  • You must be mentally competent.
  • You must be fully informed of your treatment options for all possible medical outcomes.
  • You should not be unduly influenced by anyone else during your decision making process.

Who can write a Heath Care Directive?

Every adult who is 19 years of age or older is presumed to be capable of making, changing or revoking a representation agreement, and making decisions about personal care, health care and legal matters and about the adult’s financial affairs, business and assets.In addition the following will apply:

  • You must be mentally competent.
  • You must be fully informed of your treatment options for all possible medical outcomes.
  • You should not be unduly influenced by anyone else during your decision making process.

Other Countries:

Create your  UK Living Will Today.

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