Estate Planning Pitfalls - 3 Mistakes That Could Make Your Estate Plan Worthless
Entrusted Legacy Law
For more information about the author, click to view their website: Sharek Law LLC
Jul 18, 2023
Pennsylvania - Greater Pittsburgh Area
Email US
Click to Email Us
Including a Trust as part of your estate plan is a smart decision. It allows you to avoid probate, maintain privacy, and distribute your assets to your loved ones while also providing them with a lifetime of asset protection, if you choose it for them. But, here’s the thing you might not know, and is critically important to remember: simply creating a Trust is not enough. For your Trust to work, it has to be funded properly and may need to be updated over time.
Funding your Trust means transferring ownership of your assets from your own name into the name of your Trust. This can include bank accounts, investments, real estate, and other valuable possessions.
By funding your trust properly, you ensure your assets are managed according to the terms of your Trust and will be distributed according to your wishes when you die or if you become incapacitated.
But, if you fail to fund your Trust, it becomes nothing more than an empty vessel. Your assets will not be protected or distributed as intended, at least partially defeating the purpose of creating a Trust in the first place! While your assets can still get into your trust and be governed by your Trust after your death, that means that your family still goes to court to get your assets there, and that is a costly endeavor.
To make sure your Trust works for you, avoid these funding fiascos and work with an attorney who will ensure that everything that needs to get into your Trust does.
Forgetting to Update Your Account Beneficiaries
Many people mistakenly believe that a Will or Trust alone is enough to dictate how their financial accounts should be distributed after they die. However, this isn’t the case. Without proper beneficiary designations on your accounts, your wishes may not be honored and your assets could end up in the wrong hands.
Remember, the beneficiaries you designate on your accounts supersede any instructions in your Will or Trust, so this step is vitally important.
Take a moment to review your various accounts, such as bank accounts, retirement plans, and life insurance policies. Ensure that each account has your Trust named as your designated beneficiary, unless you’ve made different plans for that specific account.
When you are working with a lawyer, make sure your lawyer has a plan for each one of your beneficiary-designated assets, communicates that plan to you, and that the two of you decide who will handle updating your beneficiary designations. Then, make sure you review your beneficiary designations annually. In our office, we support our clients to do all of this with well-documented asset inventories, and a regular review process built into all of our plans.
Your Attorney Didn’t Move Your Home Into Your Trust
For many of us, our home is our most important and valuable asset. But if your attorney doesn’t deed your home into your Trust, your home won’t be included under the terms of your Trust if you become incapacitated or pass away.
That means your home could end up going through the long and expensive probate court process in order to be managed during an illness or passed on to your loved ones after you die. If you own a $300,000 home, that means your family could lose up to $15,000 or more just to transfer your home to your trust and then distribute your home pursuant to the terms of the trust - and that’s not including any other assets that would have to go through probate.
A knowledgeable estate planning attorney shouldn’t miss this step, but it happens. And if you’re using a DIY service online to create a Trust without the help of any attorney at all, it’s bound to happen!
That’s why it’s so important to work with a lawyer who takes the time to make sure every asset you own is in your Trust before they say their farewells.
Not Reviewing Your Plan and Accounts Every Three Years
You might wonder how not reviewing your estate plan every few years could really make your plan worthless. Well, the good news is that failing to review your plan is unlikely to completely eliminate the benefits it provides you because an estate plan is made up of a number of moving parts, not just a Will or a Trust.
But, failing to keep your financial assets up to date and aligned with your estate plan can result in huge issues for you and your family and can even make the Trust you invested in worth little more than the paper it’s printed on!
That’s because your Trust can’t control any assets that don’t have the Trust listed as the owner or beneficiary. By reviewing your accounts every 3 years, you can help catch any accounts that don’t have your Trust listed in this way.
For example, it’s very common for clients to open a new bank account and forget to open the account in the name of their Trust or add their Trust as a beneficiary.
Thankfully, by comparing my clients' financial accounts to their estate plan at least every 3 years, I’m able to catch simple oversights like this that could cause their assets to be completely left out of their Trust.
Make Sure All of Your Assets Are Included In Your Plan with Help From Your Personal Family Lawyer®
Getting your legal documents in place is an important step, but it's equally important to know that the documents themselves are not magic solutions (as magical as they may seem!). Merely creating a Trust or naming beneficiaries on your accounts does not guarantee that your wishes will be carried out unless all of the pieces of your plan are coordinated to work together.
If you aren’t experienced in the area of estate planning, trying to coordinate all these pieces yourself can be a recipe for disaster.
That’s why I work closely with my clients to not only create documents but to create a comprehensive plan that accounts for all of your assets and how each one needs to be titled to make sure your plan works for you the way you intended. Plus, I offer my clients a free review of their plans and financial accounts every three years to ensure that their plans accurately reflect their lives and their wishes for their assets and loved ones.
If you want to know more about my process for funding your Trust and making sure nothing is ever left out of your plan, contact Sharek Law Office at 412-347-1731 or click here to schedule a complimentary 15-Minute Call.
This article is a service of Sharek Law Office, LLC. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Life and Legacy Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge. Please note this is educational content only and is not intended to act as legal advice.
- To view the original version of this article visit www.shareklaw.com/post/estate-planning-pitfalls-3-mistakes-that-could-make-your-estate-plan-worthless
- Seniors Blue Book was not involved in the creation of this content.
Other Articles You May Like
Estate Plan Check-Ups
Estate Plan Check-UpsEffective estate planning is personal, and its more than just deciding who to leave your assets to once you die. Effective estate planning is a comprehensive process that encompasses pre-need planning: health care decisions, financial management, and maintaining a delicate balance between independence and security. Like your preventive doctor visits, you should regularly check in on your estate plan to ensure it fits your current needs, considers and plans for potential future care needs, and will give effect to your wishes now and in the future. Generally, estate planning involves creating a last will and testament, possibly a revocable trust, possibly an asset protection trust or a supplemental needs trust for a loved one who is unable to manage finances or may be vulnerable to abuse or exploitation. Estate planning also involves important advanced directives, such as a durable financial power of attorney, a health care power of attorney, and a living will. Creating an estate plan, or getting my affairs in order, tends to be an item on our to-do lists, for us to get done and move on to the next thing. However, while it may not be something you have to look at every month, or even every year, once your initial estate plan is completed, it is something that needs to be reviewed with some regularity.Most people get an annual physical when they are healthy, not when they are sick. They do this because they want to proactively spot any issues that could cause them to become ill in the future. The same concept can and should be applied when it comes to reviewing and updating your estate plan. Your estate plan may be healthy now, but you want to make sure that it stays that way by checking it regularly, to ensure it fits your needs and family circumstances, protects and provides for you now, and accomplishes your goals and wishes in the future. Editors Note: This article is for informational purposes only and is not intended to be legal advice. This article was submitted by Ashley Day, Esq. Ashley Day Law, LLC. Reach her at 251-277-3377.
Nurturing Harmony in Caregiving: Open Communication and Conflict Prevention
Caring for aging parents involves crucial decisions regarding who will provide the necessary care and in what setting. However, these decisions can often give rise to conflicts among family members, particularly when one sibling assumes the role of primary caregiver. Through our work with clients and families, we frequently encounter these stressful and emotionally charged situations, creating a perfect storm for family disputes and distress.Reflecting on recent consultations with families, it becomes apparent that a key factor contributing to conflicts is the failure of aging parents to openly express their wishes and expectations regarding potential scenarios. When parents do not communicate their desires early and consistently, adult children are left to speculate about their parents preferences, leading to differences of opinion and sibling conflicts. To prevent such difficulties, we urge you to initiate conversations with your adult children about what if scenarios and discuss your wishes and preferences openly. This proactive effort can serve as your conflict prevention plan, saving you and your loved ones from engaging in conflict resolution in the future.In situations where a family member becomes a paid caregiver, it is essential to establish a formal caregiver agreement. This agreement serves multiple purposes, including clarifying the financial aspects of the care being provided. By having a caregiver agreement in place, you can prevent misunderstandings and promote a harmonious caregiving environment within your family. It ensures that everyone is on the same page and understands the expectations and parameters involved.Above all, open and honest communication is the key to fostering understanding and preventing conflicts among family members. We strongly recommend engaging in conversations early and frequently to address concerns, preferences, and potential challenges that may arise in caregiving situations. By doing so, you can promote a supportive and respectful environment where everyones needs are acknowledged and considered.At Bellomo & Associates, we believe in nurturing harmony within families facing caregiving challenges. Our experienced team is dedicated to providing comprehensive estate planning and elder law services that cater to your unique circumstances. Start the conversation with your adult children today, discussing your wishes, expectations, and potential what if scenarios. Visit our website to learn more about how we can support you and register for our free educational workshop. Let us help you pave the way for peaceful resolutions and a smoother caregiving journey.
Dealing with Deed Spam Mail
Have you recently purchased a home or made any changes to your propertys deed? Have you received an unexpected letter offering a copy of your deed for a fee? If so, youve likely encountered spam mail.Theres a company known as Land Solutions based in California that sends out Recorder of Deed Notices to individuals with newly recorded deeds. These notices claim that you can obtain a copy of your deed for a service fee of $109.00. Since the transfer of a deed is a matter of public record, they can easily access your name, address, and property information. While what theyre doing may not be a scam, we prefer to refer to it as spam. The truth is, the party responsible for transferring the deed, or even your local recorder of deeds, can provide you with a copy for a small fee or sometimes even for free. Theres no need to pay a separate company for this service.At Bellomo & Associates, many of our clients have received this type of letter, and we are delighted that they reached out to us before paying an unnecessary fee for a document we already possess on their behalf.When you receive such correspondence after making any changes, its crucial to research the company that sent it, reach out to the parties you were working with, and carefully read the fine print. In the case of these specific notices, the fine print typically states that it is not a bill but a solicitation, and you are not legally obligated to pay the amount requested.Together, we can minimize the impact of spam by working collectively and staying informed.
Local Services By This Author
Entrusted Legacy Law
Elder Law 100 Pinewood Lane Suite #303, Warrendale, Pennsylvania, 15086Our Firm Prepares You for Life What makes our firm different is that we were built with the needs of growing families in mind. We understand you are BUSY, you are growing, you are planning for a life of prosperity and you value ease, convenience and efficiency. You are raising children, and caring for elderly parents, while also working hard to build your own nest egg for a lifetime of support. You want to know youve made the best decisions for your family and that your plan will work when your loved ones need it most. You want to make sure your minor children would be raised by the people you choose, and never by anyone you wouldnt want, and that your teens and adult children are properly prepared to care for you and what you leave behind. You want to feel confident that youve made the right choices, and handled everything so that you arent leaving behind a mess, when something happens. That is our focus as well. Weve developed unique systems to give you the same access to a Personal Family Lawyer as was previously only available to the super-wealthy, so you can have the guidance you need to build and maintain a life of prosperity and wealth. And, to keep your family out of court and out of conflict, which is the greatest risk to the people you love and all you have created, even if youve already worked with a traditional lawyer or created documents online. Our Team Is Here for You We encourage communication with our clients. In fact, weve thrown out the time clocks so you never have to be afraid to call with a quick question. Everything we do is billed on a flat-fee basis, agreed to in advance, so there are never any surprises. We have a whole team to serve you. When you call our office to ask your quick question, you wont have to wait hours or days for a phone call back. Youll get your question answered, right away. And, if you need to schedule a more in-depth legal or strategic call with your Personal Family Lawyer, a call will be scheduled when you're both available and ready for the call so we can make the very best use of your time and not waste your time by leaving voicemail after voicemail back and forth. And, we ensure the most important details of your planning are followed through on and your plan continues to work throughout your lifetime. We have a funding coordinator to ensure your assets are owned the right way throughout your lifetime and none of your assets will end up going through a long, expensive court process or being lost to the state because they were missed after your death. Weve created unique membership programs to keep your plan up to date year in and year out as well as give you access to our Trusted Team of Legal Experts for guidance on ANY legal or financial matter. One day you will need a lawyer. I dont know why and I dont know when, but when you do, you will be grateful you can call on us and well be here to advise you or get you out of a jam. We Help You Transfer Your Life and Legacy Lastly, we believe your financial wealth is only a small part of your overall Life and Legacy Planning which is made up of your far more valuable and most often lost upon incapacity or death intellectual, spiritual and human assets. These assets are what make you who you are, and sum up whats most important to you. And, a survey of inheritors has revealed that what they care about even more than inheriting your money, is inheriting these intangible assets. Most estate plans only focus on the transfer of your financial wealth to the next generation. Most people have such great intentions of passing on the intangible, but very few ever get around to it. Its just not a priority, until its too late. How much do you know about your grandparents values? Their most prized personal possessions? How they felt about you? What they had learned during their lifetime? If you are like most people, you know very little. Thats why we build the capture and passage of these most valuable assets into every estate plan we create. Not only will we help you pass on your money, but also your values, your insights, your stories and your experience the truly valuable assets your loved ones care about the most. Weve developed a tool that allows us to capture and pass on your whole family wealth, including your Intellectual, Spiritual and Human assets. I cant go into all of the details here, but well definitely talk about it when you come in for your Life and Legacy Planning Session.