Common Planning Mistakes Or Problems

From our experience as probate lawyers we offer a summary of what we consider to be the biggest estate planning mistakes or estate planning problems:

  1. Failing To Get Assets Into A Trust

    People pay a lawyer to do a trust but fail to get all assets into a trust. For example, Mom and Dad have listed each other as primary beneficiaries on their IRA accounts, but they fail to list their children or their trust as the secondary beneficiary. When the first parent dies, the surviving parent gets the dead parent's IRA fairly easily, but then when the second parent dies, that parent's IRA money usually has to be probated unless the IRA custodian has set up special provisions. Another example, is that people do a trust and put all of their major assets in the trust but fail to put a vacation home or a timeshare into the Trust. A person in Wisconsin might put almost all of their assets into a Wisconsin trust but fail to put a Nevada timeshare into the trust. When the person dies their heirs will have to do a probate in Nevada to pass the Nevada timeshare on to their heirs because in Nevada timeshares are considered real estate and all real estate must be probated in the state in which it is located.

  2. Unequal Provision For Children Leads To Fights

    Parents who provide unequally for their children in their trust or will often leave a bitter legacy to the child who receives less. I have seen a child who receives less than a sibling under a will pick a legal fight and spend more money on attorneys fees than what is actually at stake. That is how bitter it can be to find that the final communication from a parent was to favor one child over another. If an unequal distribution makes sense because one child is wealthy and the other child, for example, has special needs or less money, the problem may be avoided if the parents obtains the consent of the child to receive less. Or, the parents can make a gift to the favored child while they are alive--either directly or by making an asset such as a bank account payable on death to the favored child--and then provide for all children to share equally in their estate.

  3. Buying Will or Trust Forms

    People buy a will form or trust form and since they are not lawyers, the may write language that can easily be interpreted in more than one way. This encourages the heirs to fight.

  4. Small Bequests & Fractional Shares

    Small bequests and small fractional awards can add to the complexity of a probate. For example, a $500 bequest to a foundation or a person will require that the $500 beneficiary be given notice of various probate hearings and be sent copies of all probate papers filed. Perhaps, the person writing a will could just trust their main heir to make a $500 gift. Or suppose a trust makes fractional awards of the entire estate to a large number of people. Now suppose, also, that the decedent, who lived in Indiana had a Nevada timeshare. Let's say that the decedent even got the timeshare into the trust so that it will not have to be probated in Nevada. So now the successor trustee has a timeshare that might be worth $2,000 and is supposed to divide it among several people. It could be quite a project selling the timeshare or getting all heirs to agree that one particular heir could have the timeshare.

  5. Dollar Amounts Versus Percentages

    Suppose a person has a million bucks and decides to leave $10,000 to each of ten people and split the rest among 4 adult children. So the parent is thinking each adult child will inherit $225,000. But supposing the parent dies owning only $100,000. Now the four adult children are cut out.

  6. Waiting Too Long to do a Trust or Financial POA

    No lawyer wants to do a Trust or a Financial Power of Attorney and then get drawn into litigation because a family member or friend claims the person who did the Trust was incompetent at the time of executing the documents. If a person is in a hospital, or other care facility, or has speech or hearing problems, or is taking heavy doses of pain medication, a careful lawyer will not want to prepare a Trust or Financial Power of Attorney for that person unless the person is examined by a psychiatrist or psycologist who certifies the person is fully mentally competent. The psychiatrist or psycologist will charge thousands of dollars without any promise of a finding of mental competence. An even an opinion by such a professional that the person was mentally competent could always be challenged at a later date. Thus, as a pratical matter the opportunity to do a Trust often closes either at some point during the normal aging process or when an unexpected medical issue arises such as a serious stroke.

  7. If you want a Trust Call us directly, Don't Have Some Else Call

    If someone wants us to do a Trust it is a big red flag if, for example, their daughter calls and wants to arrange for Mom to get a Trust done. Is the person trying to arrange a Trust for Mom pushing Mom for certain terms favorable to themselves in the Trust? We don't know and don't want the business.