Estate Planning Attorneys Reveal Seven Mistakes to Avoid When Creating Your Estate Plan

There are many considerations to keep in mind when creating your estate plan. However, some minor errors or admissions could prevent your wishes from being honored and stop your loved ones from inheriting what you desire for them. Our Williamsburg, Peninsula, and Southside estate planning attorneys want you to know seven mistakes we frequently see in our office so that you can avoid them when creating your own estate plan:

  1. Not ensuring that beneficiaries are properly named on your financial accounts, retirement accounts, or insurance policies. Many people forget to take this step, or worse, leave an ex-partner or someone who has passed away as the beneficiary. It is prudent to check these designations often to ensure your money will go to the people you want. Remember, the named beneficiary on the accounts will be honored over what is stated in a will or trust. We check these yearly through our Maintenance Plan!
  2. Selling” property for an unrealistically low price. Many people believe that selling a car to a child or grandchild for $5 or a house for $25 is the best way to ensure they inherit the assets. By doing this, there will be issues with estate, income, and gift taxes for you and your loved one. Talk to an Estate Planning Attorney and CPA before doing this!
  3. Having assets named in the trust that have been sold before you pass away and not removed from the trust designations. This may leave someone out of inheriting as you desire. Update your plan as it changes and when it changes. We use our Maintenance program to update our plans yearly for our clients.
  4. Leaving property to a minor. Until a minor is an adult (age 18) they cannot legally own property. If you want to leave real estate to a minor, it is essential to name a guardian to manage the assets of the minor. Be specific, or that might be an ex-partner. You can also place the assets into a legacy trust for long term protection which utilizes a named trustee until the child reaches the “age of reason” you choose for them.
  5. Overlooking what might happen if a named beneficiary is no longer living when the trust is administered. Too many people fail to provide direction if this happens. Create designations for who will inherit the benefit in this case. The documents should clearly state where the asset should be distributed in case a beneficiary is deceased and there should also be a remote contingent beneficiary named.
  6.  Not including a residuary clause in your will or trust. While this might seem obvious, this clause allows for the assets not listed explicitly in the Will/trust to be included in the value of the Will or trust. It acts as a safety net to catch all the items not explicitly listed that a person may own at the time of their death.
  7. Not considering the “what ifs.” These items include what happens if one of your beneficiaries develops a drug abuse problem, the named beneficiary gets a divorce, or you want to disinherit someone specifically. This is a critical part of the initial planning process and should also be discussed on an ongoing basis as life and circumstances are guaranteed to change and our documents must change with them.

Of course, the whole reason you create an estate plan is so your loved ones can inherit your legacy the way you desire. Remember inheritance is a gift not a right. Creating a solid plan ensures that your wishes will be honored and that your family can mourn your loss without having to struggle through  family issues and a difficult process because of a lack of planning or updated planning

If you want to create a plan, or you realize you’ve made one of these mistakes and you’d like to discuss how to get your affairs properly  organized, please call (866) 603-5976 to set up a consultation with our office.