Estate planning mistakes can yield negative consequences, but when you are aware of the traps that are out there, you will be ready to steer clear of them. With this in mind, we will look at three commonly made estate planning errors in this post.
Do-It-Yourself Estate Planning
You can buy generic, boilerplate legal documents on the Internet, including wills and trusts. The sites that sell them contend that it is simple to use the downloads and worksheets to create your own estate plan.
If you take a step back and apply common sense, do you think it’s a good idea to fill in the blanks and hope for the best when you are taking such an important step? After all, you are trying to facilitate the transfer of your legacy to the people you love the most.
The highly respected publication Consumer Reports conducted a study a number of years ago to measure the effectiveness of these DIY notions. People on their staff created wills using tools that were obtained from three of the leading purveyors of generic legal documents.
They used hypothetical scenarios that were not especially complicated, and they engaged three prominent legal professors to examine the wills. They found significant flaws, and they stated that unintended outcomes could come about when these downloads are used by laypeople.
At the end of the day, Consumer Reports advised their readers to steer clear of these do-it-yourself documents unless the situation is extremely simple and straightforward.
Procrastination That Leads to Intestacy
Surveys find that the vast majority of American adults do not have estate plans in place. Many of these people do think that estate planning is important, but they keep placing it on the back burner.
Unfortunately, some people pass away before they take action. This leads to the condition of intestacy, and under these circumstances, the probate court would supervise during the estate administration process.
When the court is ready to close the estate, the assets would be distributed under the intestate succession statutes of the state of Indiana. The way that the assets are distributed may not be consistent with the true wishes of the decedent.
Misconceptions About Trusts
Many people harbor misconceptions about trusts, and one of them is the idea that they are only useful for very wealthy people. This is really not the case, though there are certain types of trusts that are utilized by high net worth individuals that have estate tax concerns.
Another myth is the notion that you surrender all personal control of assets that you convey into a trust. In reality, the most commonly utilized type of trust is the revocable living trust, and you retain complete control when you establish this type of trust.
You would act as the trustee while you are alive, and you would name a successor trustee to administer the trust after your passing. Your heirs would be named as the beneficiaries of the trust.
A major benefit is the fact that the distributions to the beneficiaries would not be subject to probate. This process is time-consuming, and no inheritances are distributed while the estate is being probated by the court.
There are expenses that reduce the value of the estate before it is transferred to the heirs, and anyone that wants to pry into the details can access probate records.
The estate administration process is streamlined when a living trust is used, and you can name a disability trustee to account for possible incapacity. You can also include spendthrift protections if you have concerns about the money management capabilities of an heir.
This is one type of trust that can be the right choice for people that aren’t multimillionaires, but there are others. You should definitely explore your options before you make any final decisions.
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Today is the day for action if you are going through life without an estate plan. You can set up a consultation appointment if you call us at 219-865-2285, and you can fill out our contact form if you would prefer to send us a message.