The Top Five Estate Planning Mistakes – Are You Making Them? (Part 2)

This is part two of a continuing article.  You can read the first half of this article here.

Mistake #3: Not Funding the Trust
Many people create a living trust but forget a vital step which we refer to as “funding the trust.”  The whole purpose of creating a living trust is to avoid probate, protect your assets and to distribute them according to your wishes.  In order to do this, your assets (such as your home and any other property, retirement accounts, bank accounts, investments…etc) need to be protected by being held in the name of the trust.  If those assets are still held in your name, they will go through probate, one of the major things you created your estate plan to avoid.

This is a vital step and we continually encourage our clients to fund their trust and to ensure any assets attained later are also put under the protection of the trust.  Unfortunately, we have seen situations where a trust was created and properly funded.  Then, perhaps 5-10 years later a new property is purchased or a new retirement plan is created and the client forgets to put these new assets under the name of the trust.  After they have passed on, those assets that were left outside of the trust end up going through probate and do not have the level of protection that is given to the assets protected by the trust.

Mistake #4: Failing To Update Your Documents
It has been said that “Life IS change” and such it is.  For this very reason, it is extremely important to have your estate planning documents reviewed regularly and updated as needed.  Marriage, divorce, children, grandchildren, combined families, moving to a new state; all of these are changes that can dramatically affect your estate plan.  After any major life event, your documents should be reviewed by your MH estate planning attorney to ensure they still accurately meet your needs and wishes.

Not only does your life change, but the law changes as well.  We all know that laws are fluid things, they change over the years and our planning must change with them.  In recent years, several major law changes have occurred that have a major effect on estate planning.  Any documents created before these changes were made needed revisions in order to make them in accordance with the current law. This is yet another reason we tell our clients to keep their documents up to date.

Morris Hall recommends reviewing your estate planning every 3-5 years to ensure that all major changes in your life and in the law are incorporated into your plan as needed.  We do not charge to review your documents, so make sure you take advantage of regular reviews.

Mistake #5: Assigning Roles Incorrectly
While we want to believe that our loved ones would make correct decisions on our behalf, this is not always the case.  The first role that needs to be carefully determined is who to assign as the executor of your estate.  The executor will be responsible for ensuring that the trust is administered after your death, paying off any debts and obligations, collecting all the assets and distributing the remains of the estate to any beneficiaries according to the dictates of your living trust.  This is a difficult and time consuming process which requires a highly dedicated individual.  In some cases, a loved one may not be the best selection.  In such cases, you can choose an adviser or a company, such as MH, to act in that role.  There is usually a fee involved for this service because there is a large amount of work involved.  Whichever route you choose to go, make sure your selection is a careful one.

Another important selection that should be decided carefully is who should make decisions on your behalf if you become incapacitated.  You will assign one or more persons to make medical, financial and personal decisions for you.  This should be a person that you trust implicitly.  It should also be someone that respects your wishes enough that they can set aside their own desires to see that yours are fulfilled.  For example, you may have informed them that should you ever be in a permanent vegetative state you would like to be removed from life support.  They may have to overlook their personal desires to continue to support your life artificially in order to put your wishes first.  Sometimes family members are too emotionally involved to act in these roles and some clients choose to have friends or professionals assigned in those roles instead.  However you choose, make sure you do it thoughtfully and carefully.

Why Choose Morris Hall:
You have a number of options when it comes to estate planning, so why pick Morris Hall?  First off, estate planning and asset protection are a very complicated endeavor and you should only trust someone who focuses exclusively on those matters.  Also, MH is a proud member of The American Academy of Estate Planning Attorneys (AAEPA) which provides us additional support, advanced training, tools and information that is not available to others – which means that we can better protect your assets and your loved ones.  We are one of only two firms in Arizona that belong to the AAEPA and are the only firm in New Mexico that has been granted membership.  If you have assets and loved ones that you want to protect, you are in good hands with MH.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.