Families sometimes seek legal assistance because they are looking for damage control after a loved one has passed away. Legacy plan mistakes were made, and the surviving family members were forced to deal with difficult circumstances.
These situations are frustrating because they could have been avoided if the decedent had received the right guidance. With this in mind, we will look at some of the legacy plan mistakes that can be made in this post.
DIY Estate Planning
There have been many sitcom episodes based on a character rolling up their sleeves to try to get something done on their own. Their spouses always warn them that they are probably going to make matters worse, but they ignore the advice.
The endings are always quite predictable. Even though everyone has seen these stories unfold, people still fall into the same old traps, and this applies to estate planning.
You can buy boilerplate legal documents on the internet, including simple wills. The marketing material makes it sound like it is easy for anyone to plan their own estate. All you have to do is fill in the blanks and you are good to go.
When you plan your estate, you are facilitating very significant monetary asset transfers, and there are legal parameters that must be followed. It is pretty risky to fill in the blanks on a generic worksheet and hope for the best.
Consumer Reports put this subject under the microscope a number of years ago, and they advised their readers to steer clear of DIY estate planning. There is no reason to take chances when qualified assistance is always a phone call away.
Assuming You Don’t Need a Trust
Contrary to popular belief, trusts can be very useful for people who are not extraordinarily wealthy. The revocable living trust is a very effective tool that can be a better choice than a simple will for a number of different reasons.
First and foremost, if you use a living trust instead of a simple will, the asset transfers would not be subject to probate. This is a costly, time-consuming, and public legal process.
You can also provide asset protection when you have a living trust. It is possible to allow for limited distributions to the beneficiaries over time, and their creditors would not be able to touch the principal.
The revocable living trust is one option, but there are other reasons why you may want to use a different type of trust. You should explore all of your options before you make any decisions that yield negative consequences.
Failure to Address Incapacity
Estate planning and elder law attorneys bring up subjects that people usually try to avoid because ignoring something does not make it go away. With this in mind, you should prepare for the eventualities that you may face toward the end of your life.
The Alzheimer’s Association tells us that 32 percent of people who are 85 years of age and older have contracted the disease, and this is not the only cause of cognitive impairment.
If you do not take the right legal steps in advance, the state could appoint a guardian to act on your behalf in the event of your incapacity. You can prevent conservatorship and choose your own hand-picked representatives if you execute documents called durable powers of attorney.
You can create a durable power of attorney for financial decision-making and a power of attorney for health care matters. A living will should be added to record your life support and organ and tissue donation choices.
Another benefit that living trusts provide is the ability to prepare for incapacity. You would act as the trustee while you are alive and well, and you can name a disability trustee to assume the role if it ever becomes necessary.
Come to our next webinar!
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Attorney Caprice L. Collins is a top rated Harvard Law School graduate. She has 34 years of legal experience with a successful law practice devoted exclusively to Estate/Business Planning and Trust Administration. Attorney Collins is a well-respected keynote speaker on Wills, Living Trusts, Estate Planning, Business Planning and Trust Administration. She has appeared on California’s Real Estate Radio Station KTLK AM 1150 as a legal expert on Estate Planning and Living Trusts among many other notable media appearances.