Unfortunately, we sometimes speak with clients that come to us after a loved one has passed away. They are in difficult situations because of the mistakes that were made by their deceased family members. We do what we can to provide damage control, but our options are usually quite limited.
This is disturbing, because in many cases, the negative outcomes could have been prevented if the appropriate steps had been taken in advance. In this post, we will share a few of the scenarios that we run into so that you can make a point of steering clear of them.
Do-It-Yourself Estate Planning
There are websites on the Internet that sell boilerplate legal documents, including last wills. You may assume that you can download a worksheet, fill in the blanks, follow the instructions, and you are good to go from an estate planning perspective.
This is a huge mistake, but you do not have to take our word for it. Several years ago, the highly respected publication Consumer Reports decided to look into the subject of DIY estate planning. They had people on their staff create last wills using tools that were provided by three of the leading online purveyors of legal documents.
After the wills were created using hypothetical circumstances, they engaged three prominent legal professors to examine the results. They were unimpressed, and they stated that unintended negative consequences could come about if you try to plan your estate using DIY “solutions.”
At the end of the process, Consumer Reports advised readers to avoid do-it-yourself estate planning unless the situation is extremely simple and straightforward.
Using a Will Without Exploring the Alternatives
The most common estate planning misconception that people harbor is the idea that trusts are only for very wealthy people that have estate tax concerns. While it is true that these high net worth individuals do use certain types of trusts to gain estate tax efficiency, there are trusts that are useful for others.
We are not going to get into all the details here, because the ideal trust to utilize will depend upon the circumstances. Suffice to say that you should definitely explore all of your options with the benefit of legal counsel before you decide that a will is right for you and your family.
Failure to Address Latter Life Eventualities
Estate planning is generally considered to be an exercise in stating your preferences with regard to the way that your monetary assets will be distributed after you are gone. Obviously, this is a huge part of the equation, but you should also consider the period of time that will precede your passing.
Many people become unable to make sound decisions at some point in time due to incapacity. You may be surprised to hear that about 40 percent of folks that are 85 years of age and older have Alzheimer’s disease.
It is statistically likely that you will experience life as an octogenarian once you reach the age of 65, so you should certainly take this possibility seriously. And of course, Alzheimer’s is not the only cause of incapacity among the oldest old.
To prepare for this in advance, you could execute a durable power of attorney for property to name someone to manage your financial affairs in the event of your incapacity. A durable medical power of attorney can be added to name a health care decision maker.
If you have a living trust, you could empower a disability trustee to handle the estate administration chores under these unfortunate circumstances. A well-constructed incapacity plan will also include a living will, which is a document that is used to state your life-support preferences.
Schedule a Consultation!
We are here to help if you would like to put an estate plan in place to make sure you avoid these mistakes and others. You can send us a message to request a consultation appointment, and we can be reached by phone at 860-548-1000.
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