Estate planning can be a daunting task—but it doesn’t have to be! Our partners at Law Mother LLC are here to share five tips on how you can avoid some common estate planning mistakes.
No one likes to think about their mortality. However, once you have children who depend on you, it becomes essential. If something happens to you, what will happen to them? How do you make sure they are protected and financially provided for?
We have all heard nightmares without estate planning—children placed in the care of unfit guardians. Money becomes the priority instead of the children’s best interests. Unending legal battles can drag on for years and years. These nightmares can be avoided with some essential estate planning.
Five common estate planning mistakes and how you can avoid them:
1: Naming Your Minor Children as Beneficiaries
This is one of the most common mistakes parents make with their estate planning. When a minor child inherits property—whether through a will, life insurance policy, or retirement plan—a Guardianship must be established through the Probate Court for managing that property. A minor can’t own property, so a Guardian must be appointed to manage the property for them.
What’s the problem with a Guardianship? First, the judge may pick the last person you would ever want to manage your child’s inheritance. Second, the Guardianship ends when the child turns 18. At age 18, your child is legally an adult and can therefore own and manage property. The Guardianship will be terminated, and your child will get a check for all the remaining assets. This is true whether he or she is inheriting $5,000 or $5,000,000. Ask yourself: would you feel comfortable giving an 18-year-old $500,000—with no strings attached?
2: Not Naming Guardians
Most parents agree that protecting their children is the top priority. Too many parents with young children fail to create an estate plan or name guardians in case a tragedy strikes. Why? Many parents are simply unaware of the consequences of not planning. Some assume their closest relatives will step in and accept responsibility should something happen. Unfortunately, what would actually happen is that a judge will decide who raises your children and the judge could pick someone you would not trust to raise your children.
3: Believing a Will is Enough
If you are a parent of minor children, a will is not sufficient. There are many things a will does not do. It does nothing to minimize or eliminate estate tax. A will does not name anyone to manage your health and finances should you become incapacitated. A will does not protect the money you leave behind from your children’s future ex-spouses. It won’t adequately protect a child with special needs. Most importantly, a will does not let you bypass Probate Court. Probate Court is the process of distributing your assets when you are gone. It is expensive, time-consuming, and public. A common misconception is that having a will means you avoid Probate Court. Not so. A will actually GUARANTEES Probate Court. The only way to avoid Probate is to create a Revocable Living Trust. Please attend one of our Free Estate Planning Webinars to learn more about how a Revocable Living Trust can save your family time, money, and hassle when you are gone.
4: Not Leaving an Inventory of Assets
Even if you’ve properly “funded” your assets into your trust, your estate plan is worthless if your heirs can’t find your assets. Indeed, there’s more than $58 billion worth of lost assets in the U.S. coffers right now. Can you believe that? $58 Billion of lost assets – because people die or become incapacitated and their assets cannot be found.
That’s why we create a detailed inventory of assets, indicating exactly where to find each asset: your cemetery plot, your house deed, bank and credit statements, mortgages, securities documents, and safe deposit box/keys. And don’t forget digital assets like social media accounts and cryptocurrency, along with their passwords and security keys. We cover all of these in our plans.
5: Putting Off Planning Indefinitely
We get it. It’s not fun to think about these topics. The possibility of your death is far from a fun topic. It forces you to imagine worst-case scenarios. However, the alternative of not doing anything is much, much worse. Passing away without an estate plan puts your family and assets at risk.Beyond these common errors, many additional pitfalls can impact your estate planning. At Law Mother, we specialize in creating estate plans that will ensure your family and assets are protected, no matter what! We’ll guide you through the process, helping you to not only avoid mistakes, but also implement strategies to ensure your true Family Wealth and legacy will continue to grow long after you’re gone. If you are interested in learning more, you are cordially invited to a Free Estate Planning Webinar at Lawmother.com/webinar. We give a comprehensive overview of estate planning and review our firm’s process, packages, and fee structure in detail. If you have questions, email Clients@LawMother.com or visit LawMother.com. We look forward to meeting you!