We have worked with families that are trying to deal with estate planning mistakes that were made by loved ones. Because of this experience, we are aware of the missteps that people commonly take, and we will share a couple of them here in an effort to raise awareness.
Surveys that measure the estate planning preparedness of Americans consistently yield disturbing results. Everyone is going to pass away someday, but the vast majority of people in this country do not have estate plans in place.
Yes, the overall life expectancy is about 78 years, but you never know what the future holds. People of all ages pass away in accidents, and devastating illnesses can strike younger people. When you go through life without an estate plan, you are taking a big risk.
When there is no one depending on you and you have limited resources, there may not be a great deal of urgency, and this is understandable. However, if you have a partner and/or children, estate planning becomes an absolute must.
If you die intestate or without an estate plan, the probate court will supervise during the administration process. Ultimately, the assets will be distributed under the Connecticut intestacy succession laws, and someone that you would have never left out could be disinherited.
There are some misconceptions and half-truths that circulate about certain aspects of the estate planning process. When people buy into them, they often make errors that negatively impact their loved ones.
For example, there are some overly simplistic probate avoidance ideas. This is a time-consuming and costly legal process that would be necessary if you state your final wishes in a will.
A payable on death account is an account at a bank or a brokerage that has a beneficiary. The transfer to the beneficiary is not subject to probate. There are those that have given verbal instructions to the beneficiary with regard to splitting up the assets.
This is a leap of faith because the beneficiary would be able to do whatever they want to do with the assets after the passing of the original account holder.
Joint tenancy is another one of these so-called “simple solutions” that can go bad.
Let’s say that you own your own home, and you establish a joint tenancy with your only son. He will inherit the entirety of the property after you pass away, and the probate court would not be involved.
This sounds like a neat and tidy arrangement, but he would actually own half of the property as soon as you create the joint tenancy. If he runs into trouble with the IRS, creditors, or some other litigant, his ownership interest in the property would be available to claimants.
You would also need his permission if you wanted to sell or mortgage all of the property, and he would be entitled to a portion of the proceeds.
DIY estate planning is another mistake. Yes, you can fill in the blanks on a boilerplate document, but are you sure you are using the correct asset transfer method? Are there any details that you may be overlooking or misunderstanding?
Arranging for the transfer of everything that you have accumulated to the people you love is a profound act, and it should not be taken lightly.
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You are here because you are thinking about working with a lawyer to put an estate plan in place, and it is time to take the final step. You can schedule a consultation at our Glastonbury or Westport, CT estate planning offices if you call us at 860-548-1000.
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