Have you been meaning to finally get a will? Maybe it has been years since you even looked at your documents. Now is a good time to do so. Drum roll please, here are some common mistakes I have seen over the years:
- Not having a written plan. Not having a plan is the most common estate planning mistake. An estate plan is not simply for the wealthy. This is something that will apply to everyone eventually. If you do not direct to whom and how your assets will be distributed, Ohio’s Revised Code will control.
- Procrastinating. I have lost count of the number of people I have talked to that tell me they have been meaning, often for many years, to finally talk to a lawyer and create an estate plan. It is exceptionally easy to put off. It is human nature to not want to think about these issues. But I try to make the process as painless as possible. My clients always tell me they feel a huge sense of relief once the documents are signed and finalized.
- Not reviewing and updating your plan. There are many life changes that can impact your plan, such as births, deaths, marriages, divorces, and new property acquisitions (including out-of-state properties). An estate plan is not something to set and forget about, but rather should be reviewed upon life changes or every 3-5 years.
- Not reviewing beneficiary designations. Assets with beneficiary designations do not pass through the probate process. The will does not control the distribution of assets such as life insurance policies, retirement plans, or jointly owned property and bank accounts. It is important to confirm that your beneficiary designations reflect your wishes and are consistent with the rest of your estate plan.
- Not planning for disability. An unexpected and/or long term disability can cause large expenses and headaches for your family. A durable power of attorney is necessary so that someone can manage your financial affairs if you become mentally incapacitated. A living trust can also help in the event of a disability. But you will want to avoid the necessity of having a guardian appointed through the probate court.
- Failure to communicate your wishes. It is important to let the people named in your estate plan, whether as a guardian for your children, a successor trustee, a health care agent, or beneficiary, know what role you are asking them to play. It is generally not a good idea to surprise someone with an unexpected role to help ensure a smooth transition during a difficult period.
- Leaving money or assets outright to minor children. If you have minor children, it is better to put your assets in a revocable living trust than to give assets directly to a minor. If given directly to a minor, the probate court will oversee the accounts until the minor reaches majority. Further, with a trust, you can control the distribution over years if you prefer. Many of my clients like to stage distributions over time to ensure that their children would not receive a large inheritance before they are capable of responsibly managing the money.
- Failure to fund a living trust. See here for more information on the importance of funding a living trust: http://www.danmccarthylaw.com/legal-blog/2018/4/17/why-you-must-fund-your-trust
- Not having health care directives. Every estate plan should include a living will and a health care power of attorney. These documents permits your designated agent to make health care decision if you become incapacitated and cannot communicate your own wishes. The living will deals with end of life decisions, while the health care power of attorney deals with other medical decisions other than end of life decisions.
- Attempts to Do It Yourself. There are numerous websites that promise an easy and cheap way for you to draft your own estate planning documents. But just because you can does not mean that you should. I have had clients come in with documents they printed off from the internet. I often find mistakes that render the documents inoperable. For example, I have seen documents that are not executed properly with appropriate and necessary witnesses. Some sites create a false sense of security. If you are going to take the time and effort to create or revise your estate plan, I recommend you hire a professional to help create documents that are valid and accomplish your goals.