Ten Estate Planning Traps and How to Avoid Them
no rx purchase strattera online mechanism of action, no rx purchase strattera online mechanism of action, http://www.museodelnovecento.org#albuterol/salbutamol, http://www.museodelnovecento.org/without-prescription-order/fast-delivery-lowest-price-valtrex.html#valtrex, click www.museodelnovecento.org
Ten Estate Planning Traps and How to Avoid Them
Log in
 Use Facebook account  Use Google account  Use Twitter account  Use Microsoft account

 Use Facebook account  Use Google account  Use Twitter account  Use Microsoft account

Ten Estate Planning Traps and How to Avoid Them

Ten Estate Planning Traps and How to Avoid Them


Money Passing

If you're thinking about setting up an estate plan, you probably want to accomplish one or more of the following goals:

  Protect your assets in the event you become disabled.

  Create as trauma-free a transition as possible for your loved ones when you pass away.

  Control your medical destiny.

  Pass on as much of your hard-earned assets as possible to loved ones.

  Leave a legacy of family

Even with the best of intentions, however, there are many estate planning traps that can sabotage your goals. Below are ten common estate planning mistakes that can undermine your estate plan, and advice on how to avoid them. Remember, your estate plan will speak for you when you cannot, so it's imperative to get it right. Always seek the guidance of a certified elder law/estate planning attorney.

MISTAKE 1:  Permitting the provisions of your will to conflict with the beneficiary designations of your assets.

Why it's a mistake: Your beneficiary designations trump your will. For example, if your will says that your two children will share everything equally, but you name only one child as the beneficiary of your largest asset, that child will inherit the asset in its entirety. That's not much of a foundation for family harmony!
How to avoid it: Review all your beneficiary designations, and make sure they are in synch with your will.

MISTAKE 2:  Believing that your will provides protection if you become disabled.

Why it's a mistake: A will is a death instrument only. Basically, it's a blueprint that describes who will get what asset after you're gone. A will has absolutely no impact on what happens if you become incapacitated. If you haven't made legal provisions for incapacity and you become incapable of making your own personal, financial and medical decisions, you could find yourself the subject of a costly court guardianship.

How to avoid it: Create a health care surrogate (health care power of attorney) to ensure that if you become incapacitated, someone you know and trust can make your medical decisions. Create a Durable Power of Attorney appointing someone to make your financial decisions, or alternatively, create and fund a revocable living trust.

MISTAKE 3:  Making one or more children co-owners of your assets in order to avoid probate of the asset.

Why it's a mistake: Even if you have implicit faith in your child's integrity, if he/she runs into financial difficulties, your child's creditors could go after your assets. Co-ownership also means that after you die, that asset will belong to your child, which may be in conflict with your will or trust (see Mistake #1).

How to avoid it: You may make your child a beneficiary of your asset, or allow the asset to pass to your child through your will or trust.

MISTAKE 4:  Creating a living trust (aka revocable trust) but failing to transfer your assets into it.

Why it's a mistake: A revocable trust can offer many benefits - for example, probate avoidance - but it remains just a piece of paper until it is "funded." Funding means that the trust actually owns your assets. (Note: Certain assets should not go into your living trust while you're alive, but may pass into your trust when you pass away. Examples of such assets are your 401k, 403b or IRA.)

How to avoid it: Consult your elder law attorney about what assets belong in your trust. Then contact your financial institutions to retitle the appropriate assets into the name of your revocable trust.

MISTAKE 5:  Leaving specific assets to specific people.

Why it's a mistake: Other than certain pieces of personal property - jewelry, for example - it's generally a bad idea to leave certain assets to certain people. The reason: the value of the asset may fluctuate, skewing the value of what gets passed down to your heirs. By way of example, let's save you want your son and daughter to share your estate equally. You leave your $200,000 house to your son and your brokerage account of $200,000 to your daughter. However, over time, if the value of one or the other asset changes, your children could end up getting significantly unequal shares of your estate.

How to avoid it: Generally speaking, it's better to leave your heirs percentages of assets rather than specific assets.

MISTAKE 6:  Assuming that your child with the most business experience is the best candidate to serve as your Personal Representative, Trustee, or Agent.

Why it's a mistake: Most people appoint one or more of their adult children as fiduciaries, but overestimate the importance of business acumen. In reality, of equal or greater importance is general trustworthiness, and having the time to do the job properly. For example, the fact that your daughter is an accomplished CPA is fine -- but if she has a demanding job and young children, and lives at a great distance, serving as your Personal Representative may prove too much of a burden for her. Her selection could also stoke family tension if she cannot attend to her duties on a timely basis, thus delaying the distribution of assets to beneficiaries.

How to avoid it: Talk to whomever you are thinking about appointing as a fiduciary to determine if they are willing and able to serve. In some cases, it may be better to appoint a third-party fiduciary like a bank or brokerage trust department. A third-party fiduciary may also be a good idea if you want to avoid the discord that can arise when a parent designates one child as a fiduciary, thereby giving that one child "the power of the purse" over his/her siblings.

MISTAKE 7:  Assuming that Medicare will pick up the tab for a nursing home if you ever need long-term care.

Why it's a mistake: Contrary to common belief, Medicare does not pay for long-term care, but only for skilled nursing care on a limited basis. Given greater longevity, more and more of us will require long-term care at some point in our lives - and the astronomical expense can wipe out the average family in no time. Thus, planning for this eventuality should a cornerstone of most people's estate plans.

How to avoid it: Long-term care insurance can be a good investment. However, if you cannot afford it or if you cannot qualify for health reasons, assets may often be preserved with strategies that incorporate Medicaid planning and/or Veterans benefits planning into your estate plan. Consult a certified elder law attorney for advice.

MISTAKE 8:  Thinking that your will allows your estate to avoid probate.

Why it's a mistake: When you die, any assets passing under your will must go through the probate court. The probate court will then direct the distribution of your assets to the beneficiaries named in your will, ensure creditors are paid, etc.

How to avoid it: If one of your estate planning goals is to keep your estate out of probate, a will is not the way to go. Instead, consider a revocable trust (aka living trust).

MISTAKE 9:  Thinking that if your estate is not taxable, it avoids probate.

Why it's a mistake: It's a common misconception that only taxable must go through probate. The reality is that the need for probate and an estate's tax status are unrelated. A modest estate not subject to estate tax may go through probate if the decedent relied on a will to transfer assets. A large, taxable estate may not be probated if the decedent utilized effective probate-avoidance strategies such as a living trust (aka revocable trust).

How to avoid it: Regardless of the size of your estate, a will is not the estate planning vehicle of choice for anyone intent on making sure his family avoids dealing with the probate court. Other estate planning strategies should be investigated with the advice of a certified elder law/estate planning attorney.

MISTAKE 10:  Relying on a do-it-yourself websites or books to draft your documents, in order to save money.

Why it's a mistake: The do-it-yourself sites and books disclaim any liability; in fact, they advise you to check with an attorney! Remember, if you get your estate plan wrong, the errors will probably not be discovered until after you're gone. And then, there are no do-overs!.

How to avoid it: See an experienced and certified elder law attorney in the state in which you reside. The Florida Bar certifies lawyers in elder law, as do many other states. Also, the National Elder Law Foundation certifies elder law attorneys nationally - it is the only body authorized by the American Bar Association to confer this credential.


Florida Attorney Joseph S. Karp assists residents of South Florida and their families with estate planning, wills and trusts, probate, planning for long-term care, Medicaid planning, Veterans benefits planning, special needs planning, special needs trusts and trust administration. The Karp Law Firm has offices in Boynton Beach, Palm Beach Gardens and Port St. Lucie, Florida. Find out more by visiting http://www.karplaw.com or calling 800-893-9911.


Popular Articles

mickey rooney 2000-300x267

Mickey Rooney's Estate Finds Peace, But Will It Last?

by Andrew W. Mayoras and Danielle B. Mayoras

Five Estate Planning Lessions From The Paul Walker Estate

by Andrew W. Mayoras and Danielle B. Mayoras

Videos on Estate Planning

Can't get data from youtube.
Probable causes listed below:

1. Youtube username or Playlist is not valid with your selection. Please set the parameters correctly from module manager

2. It might also be a problem with CURL library or your server config

Reply from youtube:

No longer available

Tweets on Estate Planning

email this page