Only 4 in 10 Americans have an estate plan in place, and many of those have the wrong estate plan. Estate plans are not just for the rich and famous. Most people have at least one thing of value, such as money in the bank, a car or a home. Far too often, people make the mistake of failing to properly plan for economic security for their families should they encounter incapacity or death.
MISTAKES TO AVOID
1. Dying Intestate. Dying without a Will or other estate plan means that the State or the IRS will simply make one for you, resulting in a probate process that is needlessly time-consuming, expensive, public, and frustrating.
2. Having an “I Love You” Will. Simply leaving assets outright to a spouse might, on paper, appear to be a caring and thoughtful gesture. However, a Will simply passes the complex issues and problems associated with transferring and protecting wealth on to the spouse or future generations; it creates more problems than it serves.
3. Giving Property Outright to Children. Countless problems arise when, for example, a child is too immature to handle money responsibly, suffers a severe financial setback, marries a fortune-hunter, or is addicted to drugs or alcohol. You may need to protect your heirs from their own poor decisions.
4. Owning Property Jointly. Problems with this include postponement – but not avoidance – of probate; creation of unnecessary tax burdens; and multiple probate cases.
5. Not Having a Trust. A trust is the single most effective estate planning tool available. There are many types of trusts and among the more common are revocable trusts, irrevocable trusts, and testamentary trusts. In addition to protecting your privacy, a trust will help you leave what you want, to whom you want, in the way you want – a completely customized plan – at the lowest possible cost.
6. Not Funding Your Trust. Think of your trust as a safe doing a great job of protecting your hard-earned wealth. But it does no good if there is nothing in the trust – i.e. nothing in the safe. Establishing trust means re-titling your assets to the trust; otherwise, it does no good. Avoid procrastination in this crucial task.
7. Not Having Your Documents Reviewed and Updated. Once the estate plan is put in place it is important to not just let it sit on the shelf and collect dust. It must be reviewed at least every two to three years to keep up with changes in your life or the law.
8. Relying on Joint Tenancy to Avoid Probate. Joint tenancy can accidentally disinherit intended beneficiaries and disqualify you from Medicaid assistance for long-term care if you need it.
9. Thinking a Living Trust Alone is Enough. Additional planning and strategies are important to provide comprehensive protection: Advanced Health Care Directive; HIPAA authorization for loved ones to access medical information and records; comprehensive Power of Attorney for financial affairs to determine who will make financial decisions for you; and other vital estate planning instruments and strategies to complete your estate plan.
10. Not Understanding That the IRS is Not the Biggest Problem. The biggest threat to preserving your wealth is not the IRS but human nature, especially procrastination. And our loved ones often suffer painful financial and practical consequences.
HELP FOR YOU
Working with qualified estate planning professionals, such as the Aspen Legacy Planning, is crucial to understanding how the right plan can protect your estate and loved ones. There are resources available that families can use to deal with these deeply complex issues, such as local workshops by estate planning advisors, available to pre-qualified individuals. These workshops are informative, and sign-ups are available now. Remember, procrastination is your worst enemy, and this time of year is a perfect time to address that which you have been putting off.
Workshop dates: Thursday, June 7th @ 5:30 pm and
Tuesday, June 12th @ 5:30 pm
At the Turnac Tower, 909 St. Joseph Street, Suite 202, Rapid City
Call (605) 721-7665 to reserve a seat. Seating is limited.
Attendees will be able to schedule no-obligation consultations to address personal objectives and planning strategies.