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Costly Mistake #1: Not planning for long term care until it is needed now. Waiting until the last minute can cost you and your family tens of thousands of dollars in attorney fees, court costs, time, and lost money. Plan ahead. Assume you will need long term care. Making that assumption makes everything easier on you and your family. Plan for long term care whether you think you will need it or not.
Costly Mistake #2: Not planning at all. This is probably the worst alternative. Your family will have to take everything you own through probate. Probate is an emotionally wrenching process. Probate is financially expensive. A good planner has full set of tools that can avoid probate while not breaking the bank.
Costly Mistake #3: Forgetting your children will bear the burden of no plan. If you do not plan, then your children will bear the full emotional burden and financial cost of the probate process, courts, judges, fees, and costs. Even a simple plan can avoid probate.
Costly Mistake #4: Not creating Durable Powers of Attorney for finances and healthcare. One of the primary purposes of “estate planning” is to protect you and your assets during your lifetime. Durable Powers of Attorney allow you to make your decisions legally binding and pick a trusted representative to enforce those decisions. Even a simple durable power of attorney keeps your family out of court.
Costly Mistake #5: Assuming your spouse will not remarry. If something were to happen to you, what stops your spouse from getting married again? What if they decide to leave everything you worked for to their new spouse? That new spouse could leave it all to his children and cut your children out. Trusts are just one method to keep things like this from happening.
Costly Mistake #6: Assuming you will not get a divorce. Splitting the assets is the least of the worries of a divorce. If you get divorced, you need to create a new plan as part of the divorce process. You need to check beneficiary designations and change them immediately after the divorce is final (of course, following all court orders). A simple phone call can stop a lot of heartache later.
Costly Mistake #7: Assuming your children can manage money well. People in their 20’s and even into their 30’s have a difficult time managing large sums of money well. As a parallel, the average amount of time a lump sum accident settlement lasts is 2.5 years. The size of the settlement does not matter, it is gone in 2.5 years. A trust can hold the principal back until whatever age you decide. It is common to give it out in portions at 25, 30, and 35.
Costly Mistake #8: Not keeping your plan up to date. Laws change. Family situations change. Children grow up. The best way to keep everything up to date is to review your plan at every major step in life or at a minimum every 5 years.
Costly Mistake #9: Putting off your planning. Everybody says they can plan tomorrow. Stop procrastinating. Working with a caring planner makes the process virtually painless. You may even find that you are relieved that you have a plan when you get done.
Costly Mistake #10: Doing it yourself. This is a huge mistake. Estate plans are very complex to implement and write the documents. It is easy to make a “simple and innocent” mistake that unravels the whole plan, such as forgetting to sign an affidavit. The best solution is to work with an attorney specialized in estate planning so every i is dotted and t is crossed.
Costly Mistake #11: Forgetting your pets. You need to name somebody to take care of your pets. It is even better if you set some money aside for them. A pet trust takes care of both these items.
Costly Mistake #12: Overlooking Digital Assets. In this day and age, nobody seems to consider their Facebook account in their estate plan. A good plan will make sure your digital accounts are shut down and deleted properly. Though it is up to you to make a list of all the sites you use.
Costly Mistake #13: Not prepaying final arrangements. Your family will have enough to worry about without needing to pick and pay for your final arrangements. You can either purchase pre-paid funeral insurance or work with the facility of your choice and pre-pay the entire ceremony.
Costly Mistake #14: Not detailing final arrangements. Your family has enough to get done without needing to plan all of the details. Do them a big favor and pick everything ahead of time.
Costly Mistake #15: Putting your children on your bank accounts. This is perhaps the biggest mistake of all of them. When you put your children on your accounts, two things happen. 1) your children can spend you poor or 2) their creditors can reach through into your accounts. If you need your children to have the ability to pay your bills, a trust or Durable Power of Attorney can fill the gap while protecting your assets.
Costly Mistake #16: Not sharing your plan with your children and personal representatives. Part of planning is sharing at least minimal information with your children and representatives. They do not need to know the details, but need to be made aware of their roles. One of them should also have access to your lock box, if you have one. Your plan information can be shared in a personal conference or a letter. It is also best to make sure your personal representative wants the job before you give it to them.
Costly Mistake #17: Keeping your documents in a safe deposit box. Oops, you forgot to give somebody else access to the box. The documents saying they have access to the box are in the box. Put your representative on the signatory card for the lockbox and make sure they know where the key is.
Costly Mistake #18: No healthcare directive. There is almost nothing worse than being at the whim of a doctor. Without a healthcare directive, the doctor will treat you in your best interest as the doctor see it, and in the legally prescribed manner. Unless your family goes to court and gets a guardianship. If your family cannot agree, the court battles can go on for years and years. A simple healthcare power of attorney, HIPAA waiver, and living will keep your decisions intact and your family out of court.
Costly Mistake #19: Writing on your documents. Do not write on the originals.
Banks have been known to refuse powers of attorney with hand writing on them. Wills have been invalidated for having writing on them. If you want to make changes, make a copy, then write on the copy. If you have written on the originals, consult an attorney immediately.
Costly Mistake #20: Failure to plan for contingencies. People think that everything will happen in a certain order. However, sometimes thing occur outside the order we want them to happen in. Good planning takes contingencies into account.
Costly Mistake #21: Using a Trust when it is not needed. Many times, estate planners make everything a nail and use a hammer when it is a screw and needs a screwdriver. One size does not fit all when it comes to estate planning. Under certain circumstances, a trust may be the worst thing you can do. Or a trust could be the best. An experienced planner knows.
Costly Mistake #22: Not funding a Trust. Big mistake. People think that they just create a trust, and they are done. Nothing could be further from the truth. Creating the trust is just the first step. Your assets have to be transferred to the trust in order for the trust to work as designed.
Costly Mistake #23: Owning life insurance in the wrong name. Too much life insurance can push your estate over the estate tax limit. An irrevocable life insurance trust can keep that from happening.
Costly Mistake #24: Failing to make lifetime gifts. If you are in good health, then gifts make sense. You can slowly give away your stuff and avoid probate. However, if you need Medicaid, gifts can count against you. Gifts also have annual limits. An experienced attorney knows the annual limits and how gifting will affect your Medicaid eligibility.
Costly Mistake #25: Failing to keep track of beneficiary designations. Many people take a set it and forget about it attitude when it comes to beneficiary designations. Every year, the day after your birthday, you should check the beneficiary designations on all of your accounts and insurance.
Costly Mistake #26: Failure to plan for dementia and incapacity. Just like planning for long term care, it is best to assume that at some point you will be unable to make your own decisions either temporarily or permanently. Remember, your plan protects you, your family, and your money during your lifetime as well.
Costly Mistake #27: Only a Last Will and Testament. One word. Probate. Most of what you own will have to go through probate. Probate is expensive, time consuming, and emotionally draining. A few other documents like trusts and beneficiary deeds can stop probate.
Costly Mistake #28: No Last Will and Testament. One word. Probate. Most, if not all, of what you own will have to go through probate. Probate in this case will take a minimum of 6 months. Probate is expensive, time consuming, and emotionally draining. Some additional planning will make sure no probate has to happen.
Costly Mistake #29: Assuming your children will never develop bad habits. Parents do not like to think about their children developing a drug, alcohol, or gambling habit. A properly drafted trust can actually cut off or restrict funds if they do develop a bad habit.
Costly Mistake #30: Assuming your children will never have credit issues. Sometimes it happens. Somebody gets laid off and needs to pay for food and shelter. They use credit to do it until they get another job. Then things spiral out of control and they cannot quite make the payments. Creditors can reach into an improperly drafted trust and take their money. Properly drafted trusts make sure the principal is beyond the reach of creditors.
Costly Mistake #31: Not planning for a special needs child. A lump sum inheritance can turn off a special needs person’s public benefits temporarily or permanently. Supplemental needs trusts hold the money aside and protect the children’s benefits.
In Conclusion,
I hope that you don’t make any of these costly mistakes. And I hope you don’t make any of the many more mistakes I did not list here.
To win at estate planning, you don’t have to spend a lot of money or have a lot of assets. All you need is a proven, step by step method to make sure nothing is overlooked and gives you what you want. That is precisely what my P.A.T.H. to planning process does because I designed it that way.
I have spent the last 20 years honing planning processes down to a finely tuned system that avoids costly blunders and helps you achieve your goals.
If you would like to participate in this method – and avoid costly mistakes – I invite you to send an email to gary@dewittlawar.com or give us call at (479)770-6300.
If you want more information, please call or e-mail us and we will send you out a package with much more information in it. No office visit required, no obligation.
I promise to do everything I can to help you.
Gary
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from Estate Planning Bentonville, Springdale, Fayetteville AR http://ift.tt/1Tnuqch
from DeWitt Law Firm, PLLC
