10 Common Estate Planning Mistakes Your Family Can’t Afford to Make – Part 2
Without a thorough understanding of how the legal process works upon your death or incapacity, along with knowing how it applies specifically to your family dynamics and the nature of your assets, you’ll likely make serious mistakes when creating a DIY will or trust. And the worst part is that these mistakes won’t be discovered until you are gone – and the very people you were trying to protect will be the ones stuck cleaning up the mess you created just to save a few bucks.
Estate planning is definitely not a one-size-fits-all endeavor. Even if you think your particular situation is simple, that turns out to almost never be the case. To demonstrate just how complicated estate planning can be, last week in part one, we highlighted the first five of 10 of the most common estate-planning mistakes, and here we wrap up the list with the remaining five mistakes.
Dutiful Child or Manipulator of the Elderly?
As parents age and their physical and mental capacities diminish, it is natural for their adult children recognizing the parents’ decreasing ability to care for themselves, to step in and help them. Often, a specific child will take over the responsibilities, such as taking the parent to doctor’s appointments or the attorney’s office. As the parent begins to depend on the child more and more, it may make sense to appoint the child as a trusted decision-maker and even give them a larger inheritance to compensate them for their time. At the same time, other family members must take extreme care to ensure that a manipulative caretaker is not exploiting the elderly parent.
With more people living into their eighties and nineties, elder abuse is a serious and increasingly common problem in our society. Elder abuse can take several forms, including physical, sexual, emotional, and verbal abuse or caretaker neglect or exploitation. Up to one-half of all elder abuse in the United States is financial exploitation, which is the aspect this article focuses on. Financial exploitation includes outright theft of money or property, illegal transfers of property, identity theft, and misusing a position of trust, such as through a power of attorney.
10 Common Estate Planning Mistakes Your Family Can’t Afford to Make – Part 1
If you die without an estate plan, the court will decide who inherits your assets, which can lead to all sorts of problems. Our state’s intestate succession laws determine who is entitled to your property, which hinges largely upon whether you are married or have children. Spouses and children are given top priority, followed by your other closest living family members.
If you are single with no children, your assets typically go to your parents and siblings and then more distant relatives if you have no living parents or siblings. If no living relatives can be located, your assets go to the state. It’s important to note that state intestacy laws only apply to blood relatives, so unmarried partners and close friends would get nothing. If you want someone outside of your family to inherit your assets, having a plan is an absolute must.
Probate: What It Is & How To Avoid It – Part 1
Unless you’ve created a proper estate plan when you die, many of your assets must first pass through the court process known as probate before those assets can be distributed to your heirs. Like most court proceedings, probate can be time-consuming, costly, and open to the public, and because of this, avoiding probate – and keeping your family out of court – is a central goal of most estate plans.
It’s important to point out that even if you have a will in place, your loved ones will still be required to go through probate upon your death. Therefore, if you want to keep your family out of court and out of conflict when you die, you cannot rely solely on a will, and you’ll need to put in place other estate planning vehicles, which we will cover in further detail later.
Using Beneficiary/Transfer-on-Death Deeds
A TOD deed (also known as a beneficiary deed) does what it sounds like it does – it transfers your real property to your selected beneficiaries upon your death, similar to a payable-on-death designation for a bank account or a transfer-on-death registration for an investment account. You continue to own and control the real property during your lifetime, so you can sell it, lease it, refinance it, give it away, or do anything else with it you choose.
You also continue to pay the mortgage and taxes and maintain the property. If you still own the property at your death, the TOD deed works to automatically transfer the property to your named beneficiaries without having to go through probate. And if you change your mind during your lifetime about whom you have named as beneficiaries in the TOD deed, you can amend or revoke it at any time.
5 Ways DIY Estate Plans Can Fail & Leave Your Family At Risk – Part 2
State laws are also particular about who can serve in specific roles like executor, trustee, or financial power of attorney. In some states, for instance, the executor of your will must either be a family member or an in-law and if not, the person must live in your state. If your chosen executor doesn’t meet those requirements, they cannot serve.
Furthermore, some states require the person you name as your executor to get a bond, like an insurance policy, before they can serve. Such bonds can be challenging to get for someone who has a less-than-stellar credit score. If your executor cannot get a bond, it would be up to the court to appoint your executor, which could end up being someone you would never want managing your assets or a third-party professional who could drain your estate with costly fees.
5 Ways DIY Estate Plans Can Fail & Leave Your Family At Risk – Part 1
Creating your estate plan using online document services can give you a false sense of security – you think you’ve got estate planning covered when you most likely do not. DIY plans may even lead you to believe that you no longer need to worry about estate planning, causing you to put it off creating a proper plan off until it’s too late.
In this way, relying on DIY estate planning documents is one of the most dangerous choices you can make. In the end, such generic forms could end up costing your family even more money and heartache than if you’d never gotten around to doing any planning at all.
One of The Greatest Gifts To Your Family Is The Plan For Incapacity
Incapacity can be a temporary event from which you eventually recover, or it can be the start of a lengthy and costly affair that ultimately ends in your death. Indeed, incapacity can drag out over many years, leaving you and your family in an agonizing limbo. This uncertainty is what makes incapacity planning so incredibly important.
The goal of effective estate planning is to keep your family out of court and out of conflict no matter what happens to you. So if you only plan for your death, you’re leaving your family – and yourself – extremely vulnerable to potentially tragic consequences.
FAQs About Long-Term Care Insurance
With the booming aging population, more and more seniors will require long-term healthcare services, whether at home, in an assisted living facility, or a nursing home. However, such long-term care can be costly, especially when it’s needed for extended periods.
Moreover, many people mistakenly believe that their health insurance or the government will pay for their long-term care needs. But the fact is, traditional health insurance doesn’t cover long-term care. And though Medicare does pay for some long-term care, it’s typically limited (covering a maximum of 100 days), challenging to qualify for, and requires you to deplete nearly all of your assets before being eligible (unless you use proactive planning to shield your assets, which we can support you with if that’s important to you and your family).
Britney Spears’ Nightmare Conservatorship Underscores The Vital Importance Of Incapacity Planning – Part 2
This week, we continue the conversation about Britney Spear’s nightmare conservatorship. Last week, in part one, we highlighted the real potential for abuse that exists within the conservatorship and guardianship system.
Britney Spears’ Nightmare Conservatorship Underscores The Vital Importance Of Incapacity Planning – Part 1
Since the age of 16, when she burst onto the charts with her debut single, “…Hit Me Baby One More Time,” Britney Spears has been one of the world’s most famous and beloved pop stars. Yet despite her massive fame and fortune, Britney, who is now 39, has never truly had full control over her own life.
Just Married? 6 Estate Planning Essentials for Newlyweds – Part 2
Indeed, once your marriage is official, your relationship becomes entirely different from both a legal and financial perspective. With this in mind, last week in part one, we discussed the first three of six essential items you need to address in your plan, and here we cover the final three.
Just Married? 6 Estate Planning Essentials for Newlyweds – Part 1
Indeed, once your marriage is official, your relationship becomes entirely different from both a legal and financial perspective. With this in mind, if you’ve recently said “I do” or have plans to do so in the near future, check out the following six essential items you need to address in your plan.
Why Is My Trust So Long?
When you met with an attorney a few weeks ago, perhaps all you expected was a simple will. Maybe you thought that, with your situation, the work should be easy and the documents should be few. But now that you have finished working with the attorney, your parting gift is a large binder filled with hundreds of pages. You may be wondering, “Why is my trust so long?”
3 Vital Estate Planning Documents For High School Graduates
With the arrival of summer, young people across the country are about to reach a key milestone: high school graduation. If you have a child claiming their diploma, now is the time to prepare them for life after leaving the nest.