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Daniel Garner
Attorney, Entrepreneur, and Advisor

10 Common Estate Planning Mistakes

1. NOT HAVING AN ESTATE PLAN One of the greatest mistakes is dying without an estate plan. This results in intestacy, which is another way of saying that the state will force its own will upon the heirs it chooses. Even for those who realize an estate plan can benefit them, this realization sometimes comes too late in time when an unexpected death or disability occurs. When you’re young you may not have many physical assets to your name yet, but a lot goes into estate planning. If you wind up in the hospital with no way to communicate, you’ll wish you had designated a Power of Attorney and Health Care Directive. Estate planning is about making sure that your finances are taken care of if you’re incapacitated, that decisions about your health care are carried out the way you’d like even if you’re not able to make them, and that your children and other heirs are taken care of when that time eventually comes. 
2. IMPROPER USE OF JOINTLY HELD PROPERTY If used excessively or used by the wrong parties jointly held property can become a nightmare of unexpected tax and nontax problems. Even when property is jointly owned by spouses, the surviving spouse can give away or at death leave the formerly jointly owned property to anyone the surviving spouse wants, holding property jointly results in a total loss of control at the first death. A solution to the estates assets all being given to the surviving spouse is the establishment of a trust that provides income to the surviving spouse as well as other financial security. 
3. NOT PLANNING FOR DISABILITY OR INCAPACITATION Dying is not the only reason to have an estate plan in place. An unexpected or long term disability can often have greater consequences on your personal and financial affairs. Decisions such as who will handle your finances, raise your children, or make healthcare decisions on your behalf are extremely important. Therefore it may be necessary to appoint a power of attorney and creating a health care directive to work on your behalf if you’re unable to do for yourself. 
4. SETTING IT AND FORGETTING IT An estate plan should be reviewed when family circumstances change such as a birth of a child or divorce, for major law changes, and upon significant changes in wealth or changes in residency to the testator or beneficiaries. Funding of the revocable trust is also important and is often forgotten, the trust does not exist unless it holds assets. When you establish a revocable trust, you need to retitle your accounts in the name of the trust and use a pour over will to ensure assets like jewelry or artwork are moved into the trust. 
 5. CHOOSING THE WRONG EXECUTOR OR TRUSTEE Naming the wrong people to administer the estate can be disastrous. The person who administers the estate must collect all assets, pay all obligations, and distribute the remaining assets to beneficiaries. These tasks are highly complex, time consuming, and, in some cases, technically demanding. Lastly, the appointment of executors who do not know, or get along well with, the family members they are to serve sometimes results in chaos. A similar problem can occur if more than one executor is chosen and the executors do not get 
6. NOT CONSIDERING THE NEEDS OF YOUR CHILDREN Many parents who establish trusts when their children are younger assume that by the time those kids are young adults, they will be responsible enough to handle their inheritances. Parents often realize that they could be giving their kids too much too soon and decide to delay the larger portions of their children’s inheritance to when they are older.Allowing the trustee to have more discretion in distributing their money is often the best course of action. Each of our children are different, and the key is to disperse money in a way that will improve their lives for the long-run. Using a trust fund can be a smart way to leave money to relatives, since it is administered by a trustee who must dole out the cash exactly how and when you tell them to. 
7. IMPROPERLY ARRANGED LIFE INSURANCE The proceeds of life insurance are often payable to a beneficiary at the wrong time or in the wrong manner sometimes there is inadequate insurance on the life of the breadwinner in a family or the key person in a corporation. Whenever life insurance is paid to the insured’s estate, it is needlessly subjected to the claims of the insured’s creditors and in many states unnecessarily subjected to state inheritance tax costs. One way to avoid life insurance estate taxes is to set up a life insurance trust to act as the owner of your life insurance policies. This way you avoid hefty estate taxes being placed on the insurance proceeds, and spare your spouse or beneficiary any undue hardship in waiting up to several months for a pay-out of the insurance proceeds. 
8. THINKING ALL YOUR ASSETS WILL FOLLOW YOUR WILL OR TRUST Retirement accounts and insurance policies are governed by the beneficiary form you filled out when you opened the account or bought the policy. These assets do not flow through your trust or your will. Whomever you designated on that form you signed so long ago is who will get that money should you die. It’s a good idea to look at those beneficiary forms and revise them, especially if you have gone through a divorce or had more children. It’s the easiest thing you can do, and it costs you nothing. 
9. THINKING THAT HAVING A WILL AVOIDS PROBATE This may be wishful thinking as probate can be a long and expensive process in which one or more courts decide who will inherit your assets. While a will provides the court with guidance on your wishes, it doesn’t actually avoid the process altogether. Since a will is public information, it can be easily contested in court, adding more time and cost. In addition, if you have real estate in more than one state, each property may have to go through probate in its respective state. 
10. LACK OF LIQUIDITY Most people don’t have the slightest idea of how much it will cost to settle their estates or how quickly the taxes and other expenses must be paid. Worse yet, they don’t realize that a forced sale of their most precious assets, highest income producing property, or loss of control of their family business will result from an insufficiency of cash. Liquidity demands have increased significantly in the last few years and should be revisited by those who have not done a “what if” hypothetical probate. Thinking about the inevitable is not very pleasant and maybe that’s why so many people fail to plan for their passing. Even clients who make the effort to plan their estates often neglect to follow through or update their plans as changes occur in their lives. For your estate plan to remain a valuable asset for you and your heirs, you would be wise to avoid these 10 common mistakes. Feel free to contact Garner Law if you have any questions.