When it comes to estate planning, simple errors can result in enormous hassles. Avoid these common estate planning mistakes:
Not Having a Proper Estate Plan
Procrastination is a huge mistake when it comes to estate planning. Contact an estate planning attorney and get ye a plan! Outdated documents are another estate planning mistake. Your attorney should keep your trust up to date and relevant. At the time of your death there should be absolutely no issues or questions about your estate plan.
Not Funding the Trust
If you have signed your living trust document but haven't changed titles and beneficiary designations, you have not funded your trust.
If your trust sits unfunded, you will not avoid probate. Funding your trust could be time consuming but do not procrastinate.
It is not unusual for a bank to request what is called a “Certificate of Trust”. A “Certificate of Trust” is proof that your trust exists. Be sure to ask your attorney if he/she will prepare a “Certificate of Trust”.
When an attorney prepares your trust, he/she should also prepare a “Pour Over Will”. A Pour Over Will acts as a safeguard for any asset not transferred into the trust. The Pour Over Will sends loose ends into the trust. However, the loose ends may still have to go through probate.
Not Sharing Your Estate Plan with Loved Ones
Sit down with your loved ones and talk about your estate plan. Communicate your choices as well as your wishes. This is an important thing to do while you are still here.
Choosing a Trustee for your Trust
Often trusts remain unsigned and not funded for lack of named trustee or, if you have kids, a named guardian. The decision is very important. For your children you want someone responsible, loving and close to the family. For a trustee, you want financially savvy and who will respect your wishes as communicated in the trust. While you may be undecided and wobbling, it behooves you and everyone involved to make a decision.
Sloppy Papers
Sloppy financial papers and records are inexcusable! Take an afternoon and organize your papers into a file with a table of contents. The last thing anyone wants to do is try to organize someone else’s sloppy desk.
Leaving All Possessions to the Surviving Spouse
It is not the wisest decision to leave all possessions in the trust to the surviving spouse. Here is why: Each spouse isn't able to take full advantage of his or her Exemption Equivalent Credit ($2 Million), and the full estate will be taxed at the second death.
Here is the solution: If the estate is more than $2 Million, consider a Trust B. Your estate planning attorney can explain in detail why Trust B is a great option for estates that may not qualify for the Exemption Equivalent Credit.
