Every family has one: the brother-in-law or aunt who knows everything about, well, everything. If the information is wrong, expensive problems are created, especially when it comes to estate planning. Estate planning attorneys devote a good deal of time trying to educate their clients to help prevent unnecessary and costly mistakes, as described in the article “Misinformation, poor assumptions result in major planning mistakes” from The News-Enterprise.
The most common is the idea of a “simple” estate plan. What does “simple” mean? For most people, the idea of “simple” is appealing—they don’t want to deal with long and complicated documents with legal phrases they don’t understand. However, those complex phrases are necessary, if the estate plan is to effectively protect your interests and loved ones.
Another mistake is thinking an estate plan is a one-and-done affair. Just as people’s lives and fortunes change over time, so should their estate plan. An estate plan created for a young family with small children won’t work for a mature couple with grown children and significant savings.
Change also comes to family dynamics. The same cousin who was like a sister during your teen years may not be as close in values or geography, when you both have elementary school children. Do you still want her to be your child’s guardian? A beloved brother-in-law isn’t so beloved if he divorces your favorite sister. An updated estate plan takes into account the changing relationships within the family, as well as the changing members of the family. When families change, estate plans need to be updated.
Here is a huge mistake rarely articulated: if you don’t think about death or incapacity, then neither event will happen. We know that death is inevitable, and incapacity is statistically probable. Planning for both events in no way increases or decreases their likelihood of occurring. Instead, planning can provide peace of mind in knowing you have prepared for both events.
No one wants to be in a nursing home but telling loved ones you want to remain at home “no matter what happens” is not a plan for the future. It is devastating to move a loved one into a nursing home. However, people with medical needs need to be there to receive proper care and treatment. Planning for the possibility is better than a family forced to make such arrangements, financial and otherwise, on an emergency basis.
Do you remember that all-knowing family member described in the start of this article? Their advice, however well-intentioned, can be disastrous. Ill-advised alternatives to estate planning take many shapes: putting the house in an adult child’s name or adding an adult child’s name to a parent’s investment accounts. In either case, if the beneficiary has a future tax liability, debt issue or divorce, the parent’s assets are there for the taking.
A properly prepared estate plan, created with the guidance of an experienced estate planning attorney, will protect you, those you love, as well as the assets you’ve gained over a lifetime. Don’t fall for the idea of “simple” or back-door alternatives. Formalize your goals so your plans and wishes will be followed achieved.
Reference: The News-Enterprise (Aug. 24, 2021) “Misinformation, poor assumptions result in major planning mistakes”