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Common Estate Planning Mistakes and How to Avoid Them

Common Estate Planning Mistakes

Estate planning and end of life planning are about taking control of how your medical needs are met when you are unable to communicate your wishes and assuring an orderly distribution of your assets post-death.  When we are “young” [at 54 I consider myself young-ish so I use that word with a broad brush] — death and long-term care later in life might be hard to see as relevant, may seem scary or morbid but we shouldn’t put off planning out of fear of the unknown or because it’s unpleasant.   Often folks come to me after a health scare that shakes them up but I strongly encourage folks to NOT wait for life to happen to you –take charge and take care of things now.

Here are five common estate planning mistakes people make and suggestions for how to take action:

Not having a plan in place

If you don’t have a Basic Estate Plan in place, medical defaults, state guardianship, and intestate succession laws and the probate process will determine how you are cared for and where your assets go. You do not want your estate and end of life care managed by state laws and the court system –be proactive and meet with an experienced Estate Planning attorney to set up an end of life and estate plan.

Not Updating Your Plans

Having a plan from 1983 isn’t enough. Estate plans need to be updated after significant life events, when your goals shift or when public policy changes.  Make sure you review your Estate Plan regularly and make changes when necessary, with the help of an experienced Estate Planning Attorney –I meet with my clients every few years free of charge just to touch base.  Find “your attorney” and do the same –even if it costs a few bucks it’s money well spent. 

Improper ownership of assets

End of life planning can expose oversights surrounding asset ownership. The first mistake people make is not owning property jointly with rights of survivorship as spouses. On specific occasions, spouses may want to keep property separate but this should be calculated not accidental. When they own property together, it creates creditor protections and efficiencies in transferring property upon the first spouse’s death. Taking asset ownership too lightly or improperly executing it can cause problems when it pertains to estate and end of life planning. Make a listing of your assets and meet with an attorney to understand how they fit into your Estate Plan.

Not planning for minor children/beneficiaries

One of the most important goals of estate planning is to make sure your children are cared for in the case of you and/or your spouse’s untimely death. You also need to have a proper Will in place that designates a guardian (make sure you ask the relative or friend before listing them as the designated guardian —I strongly advise against “surprise” guardians).  That said, this subject deserves its own blog so look for one in the future but in the meanwhile please know this is probably the #1 overlooked Estate Planning area and that may be because when our children are young so are we —don’t be a statistic and visit with an attorney so that you have your family covered.

Heidi S. Webb, Attorney at Law serves clients in Daytona Beach, Ormond Beach, Port Orange, Melbourne and beyond with matters of Elder Law, Estate Planning, and Probate Law.   Contact her today to schedule a free consultation. Visit her page on Facebook, or see what her clients are saying to learn more about Heidi.

Ask Heidi : What are the Steps for Probate Once a Loved One Passes?

Steps for Probate

When a loved one passes away, the circumstances are emotional and stressful for anyone. The last thing on your mind is the practical and legal steps that must take place during this time. I tell everyone that you should take a breath, take care of putting your loved one to rest, grieve, spend time with family and THEN contact an attorney —there are very few circumstances where dealing with the legal aspects can’t wait a week or so.  Sometimes a quick phone call with your attorney can give you the peace of mind you need to not rush out to a meeting with an attorney when you really aren’t up for dealing with business yet. 

Meet with a probate attorney. 

The Personal Representative named in the Will should choose the attorney —often the attorney who did the Estate Planning is still practicing and is a good first step if that isn’t possible ask for a referral from your friends —the “yellow pages” isn’t always the best stop.  If you cannot get a referral then get online and read those reviews! It’s important that you find an attorney who can evaluate your circumstances and give you a game plan that you understand. You must feel comfortable with your attorney. The advice of competent counsel can save a lot of frustration and running down dead ends.

Initiate Probate.

If you are advised that a Probate is needed it must be initiated before anyone can begin selling, transferring, or using estate property.  It will not happen spontaneously someone must initiate the probate process. It is my advice that you hire an attorney —there is no Probate circumstance that I personally would ever recommend someone do without an attorney.  While an attorney is not required for a Summary Probate in Florida it is a process that will go much more efficiently if you are represented by counsel. In Florida, an attorney MUST represent the Estate if a Formal Probate is needed.  An experienced attorney can evaluate your case during your initial consultation and tell you which type of Probate if any, your circumstances dictate.

Take Inventory and Pay Debts

The probate process starts with a Petition and then publication to alert creditors of the action, followed by an inventory of all assets (real estate, bank accounts, investment accounts, etc.), which will need to be filed with the probate court and then ultimately payment of the Estate’s obligations.

Resolve Conflicts

At any point in the probate process, conflicts or legal challenges might arise. These will necessarily extend the amount of time it takes to settle the estate and will usually result in more estate expenses. Again, a qualified probate attorney can help you navigate this stressful piece of the process. 

Distribute Assets

Once all conflicts are resolved, estate debts are paid, it’s time to begin distributing assets. If there’s no Will, state intestacy laws will determine who the inheritors are.

Close the Estate

Finally, after everything is distributed your attorney can Petition the court to close the estate. Once approved, the Personal Representative will be discharged and the Estate will be closed.

 

Strangest Estate Planning Requests

Estate Plan

Creating a Will allows us to control the nature of our property as well as fulfill some last wishes. But what if those wishes are very strange?

You would not be the first!  A surprising unusual estate planning request comes from William Shakespeare.  Shakespeare all but excluded his wife, Anne Hathaway, from his Will instead leaving the bulk of his sizeable estate to his eldest daughter, Susanna. To his wife, he left his “second-best bed”. This request was separate from the Will, tacked on as if it were just an afterthought. At this time leaving someone a good quality bed was not unusual but some scholars do think this could have been meant as an insult.

Magician Harry Houdini’s last wishes included a request for his wife to hold a mini séance every year on the anniversary of his death. They even agreed upon a phrase he would communicate –the message would be “Rosabelle believe”, a secret code which they agreed to use that he would say as confirmation that it was him really speaking.  Rosabelle was their favorite song. His wife, however, quit the séances a decade after his death —must’ve tired of waiting for Rosabelle.

Husband of the year for sure if you know me — Comedian Jack Benny left a provision in his Will instructing a local florist to deliver a red rose to his wife every day for the rest of her life.

Strange or purposeful?  Do you remember when businesswoman Leona Helmsley left her dog “Trouble” 12 million to inherit? A judge later reportedly reduced the inheritance to 2 million. That is still a lot of dog bones!

These were fun examples but remember…unusual provisions in Wills could confuse your family members if you are not careful. If you are seeking guidance in writing a Last Will and Testament or you’re looking to set up a Trust for your family, please make sure you consult an experienced Estate Planning attorney so they can explain the entire process in detail.

 

 

What is a Living Will?

Living Will

In the event you become both mentally and physically incapacitated and can no longer make end-of-life choices yourself, a properly drafted Living Will (also called an Advance Directive) states your wishes and a plan of action regarding medical treatment and life-sustaining measures.

A Living Will is a document which states whether or not you want to be put on life support if you become are both mentally and physically incapacitated, and terminally ill, in an end-stage condition or in a persistent vegetative state and your attending physician says there is no reasonable expectation of recovery.  In addition, it addresses other important issues such as tube feeding, artificial hydration, and pain medication. 

A Living Will is only effective if you are not able to communicate your wishes on your own. 

The key is to put your wishes in writing, so others will know what they are, and make sure that your physician(s) and family have a copy of the document or know where to get a copy of it immediately.  Without direction from you with these legal documents, your family members and health care professionals can easily become uncertain about treatment decisions. When family members disagree about what course to follow, the consequences are sometimes rifts that are never resolved.

Having a Living Will (and a power of attorney) in place you can direct what kind of extraordinary measures you do or not want while also naming someone to make sure your wishes are carried out.    Your Living Will may be one of the most important Estate Planning documents you ever make. Giving your loved ones clear written direction about your final wishes can spare them not only additional grief but puts you in control of making sure you get the kind of care you want. 

It Take A Village: Hiring For Your Small Business

small business

When you start a small business, it seems lofty to think that one day you will need to hire people to help you run it.  Here is a couple of ways to see if hiring someone or using a freelance for their services makes sense for your business:

You don’t know how to do it.

This is obvious, but if there are business skills you don’t feel comfortable with executing…it would be harmful to wing it. If money is an issue, do your research (YouTube is your friend) so you can make an educated decision on if this is something you can handle on your own or need to farm out.

You just simply do not want to do or have zero time to do it.

One of the best pieces of business advice ever given was this: Think of things you simply do not want to do that are essential to make your business or home life run smoothly and find ways to have someone or something do them for you.

A great example is to consider hiring someone (even once a month) to come to clean your house. You are now an entrepreneur that has poured blood, sweat, and tears into your business. This is now a day in and day out process which no longer entails a time clock or a nine to five mentality. The last thing you want to do on a Saturday morning is to drag out the vacuum.

Using Shipt and a bookkeeper also comes to mind. Basically, digging deep into thinking about the tasks you dislike and wish someone could take them off your hands so you can focus on building your business lies in this category.  The adage —Work Smarter not Harder comes to mind.  Embrace it and learn to delegate.

Adding people to your village will help you and your business succeed and will warrant the investment!

 

 

How to Choose the Right Estate Planning Attorney

estate planning attorney

Choosing the correct Estate Planning Attorney is essential

 

Once you’ve located a prospective estate planning attorney, you’ll need to ask the attorney the following list of questions to determine if they’re truly qualified to help you:

Is the attorney’s primary focus on estate planning?

Unless you live in a very rural area I think you will find that most attorneys have narrowed their practice these days and with good reason, the law is complex.  In all areas of practice.  Now, that said, while it may be not as critical to be a specialist to prepare a simple Will —I personally think it makes a huge difference in an attorney’s ability to issue spot.  If what you do is Estate Planning and Probate you get a unique perspective from both ends of the process that can offer valuable insight.

 How many years of experience does the attorney have?

The more years of experience the attorney has the more the attorney will have had the opportunity to see their essential estate planning documents in action when a client becomes disabled or dies. The wills, trusts, powers of attorney and health care documents used by attorneys who have been in business for a while have been revised and tweaked to deal with the everyday situations that their clients encounter. The answers to these questions will give you the peace of mind to know that the documents they prepare for you will work when they’re needed.

Does the attorney adequately assist clients with funding their assets into a revocable living trust?

Many attorneys create beautiful estate plans for their clients but then fail to assist them with the next important step: funding the revocable living trust. A well-drafted trust will be virtually useless immediately after you die if your assets aren’t titled in the name of the trust while you’re still alive. Some firms have full-time funding assistants or even entire funding departments, while others will give you comprehensive written instructions. Others will merely mention the importance of funding but fail to provide you with any guidance whatsoever. I strongly recommend that you work with an attorney who will oversee the funding process and even pay the attorney an extra fee to do so because chances are you won’t complete all of the necessary funding on your own.

Q: What is the most common mistake you find in your practice?

most common estate planning mistake

Answer:  Naming an out of state –non-blood related– Personal Representative. We see this mistake made in a few Wills every year: the decedent names a non-resident of Florida, such as a close friend, or an out of state attorney as their Personal Representative. These individuals would not qualify to serve under Florida Law. 

The answer is thoroughly outlined in Fla. Stat. §733.304. A nonresident who is not domiciled in the state of Florida cannot qualify as Personal Representative unless:

  1. A legally adopted child or adoptive parent of the decedent;
  2. Related by lineal consanguinity to the decedent [a/k/a blood relative];
  3. A spouse, or a brother, sister, uncle, aunt, nephew, or niece of the decedent, or someone related by lineal consanguinity to any such person; or
  4. The spouse of a person who otherwise qualified under this section.

This mistake is a good example of why reviewing your Estate Planning documents every few years with the help of your Attorney is crucial to avoid mistakes. If you are unsure about the named Personal Representative in your Estate Plan or do not have an Estate Plan at all, make an appointment with an Estate Planning Attorney where you live. If you are located in the Daytona Beach area, call my office for a free consultation.

Ask Heidi: What are the first Steps I should take for my Estate Plan?

Estate Plan

 

Answer:

Think about whom you would like as Personal Representative for your estate. You don’t have to limit your ‘pool’ to family members and friends. Many lawyers, banks and other planning professionals have a person or department that can be named to carry out your wishes.

Create a living will. A living will, or “5 Wishes” as local hospitals call it, is a document which states your wishes should you be incapacitated and in a situation where you need to be placed on life support AND there is no expectation of your survival or recovery. Once completed your primary physician’s office may want a copy, so they are aware of the action you want taken in the face of difficult end-of-life decisions. 

Think about whom you would like as name a Health Care Surrogate or Power of Attorney. This person is tasked with making decisions about your health in scenarios not covered by your living will.  For example:  a patient with advanced Alzheimer’s Disease and two treatment options for a severe medical issue –someone with capacity needs to make the decision. As with your Personal Representative, this could be a non-relative, such as a third-party professional or clergy, if they’re willing to accept the responsibility.  Always talk to your potential designees. 

Check your named beneficiaries for your 401(k) plans and life insurance policies. These non-Probate Assets become Probate Assets if you fail to designate beneficiaries. They don’t HAVE to go to people –often people choose to leave some assets to a charity of their choice –if this is you there are several options to take care of these wishes ahead of time such as Donor Advised Funds and Charitable Trusts that may be able to help your taxes now, too.

Find an Estate Planning Attorney. Hire an Estate Planning Attorney to properly draft these documents and help guide you through this process.

These are just the first steps… go, talk to that Attorney. If you have a plan in place, review your options to ensure everything is accurate.

Why Naming Beneficiaries Is Important Regarding Contractual Assets

There are many pitfalls to be avoided when putting together your Estate Plan, especially if you try to do it yourself. For this post, I am going assume an Estate Planning Attorney is drafting your documents, which as you know is what I highly suggest everyone does. That said, naming beneficiaries is all on you and is a critical job when it comes to Estate Planning.

Before you can name who you want the asset to go to after your passing, you have to know what assets you have. If you own contractual assets (Annuities, Life Insurance, Retirement Accounts, to name a few) that include beneficiary designations, it’s important to name your beneficiaries; otherwise, your assets will transfer according to the contract’s default beneficiary provision –which is most likely your Estate. If your assets pass to your Estate, that could result in a timely probate process, additional estate expenses, and exposure to creditor claims to name just a few potential issues.

I discuss at length my client’s financial holdings at our initial meeting, and as their “homework” I have them gather copies of contracts, most recent statements, and current beneficiary designations. This exercise allows me to compile an Asset Inventory and advise my clients appropriately as to how they can “Probate Proof” themselves in conjunction with the documents I prepare for them. A full understanding of how your assets will transfer after your death helps create an Estate Plan that fulfills your wishes and prevents delays for your heirs. Designating beneficiaries incorrectly can have far-reaching negative consequences and is an essential part of your overall Estate Plan. If you are unsure about your Estate Plan or do not have an Estate Plan at all, make an appointment with an Estate Planning Attorney where you live. If you are located in the Daytona Beach area, call my office for a free consultation.

ASK HEIDI: What is the number one mistake most people make regarding their Estate Plan?

Short Answer:  Not naming a beneficiary or keeping their beneficiaries up to date on their contractual “non-probate” assets is the most significant mistake that folks routinely make regarding their Estate Planning.

Why it’s Important:   If you own contractual assets that include a beneficiary designation, it is important to name your beneficiaries and keep them updated; otherwise, you could omit a later-born child, leave assets to someone else’s estate or create a situation where there is no beneficiary because certain life events void beneficiary designations (divorce for example) and then your assets will transfer according to the contract’s default beneficiary provision –most likely the intestate succession laws under your state’s law. Retirement accounts are an example.

When you meet with your Estate Planning Attorney, discuss ALL your assets, not just what you think you should discuss –everything needs to be included in your Estate Planning and your attorney can only give the proper legal advice if they know all the facts. If you have questions regarding this issue or any Estate Planning issue and live in the Daytona Beach area, give me a call to schedule a free consultation.