This is the final article in a series discussing the real costs to your family for failed estate planning. This article continues the discussion of the most common and costly planning mistakes encountered. Here, I discuss how not updating your estate plan will likely result in a failed estate plan.
If you’re like most people, you probably view estate planning as a burdensome necessity, just one more thing to check off of life’s endless “to-do” list.
You may shop around and find a lawyer to create planning documents for you, or you might try creating your own DIY plan using online documents. Then, you’ll put those documents into a drawer, mentally check estate planning off your to-do list, and forget about them. The problem is, your estate plan is not a one-and-done type of deal.
In fact, if it’s not regularly updated when your assets, family situation, and/or the laws change, your plan will be totally worthless when your family needs it. What’s more, failing to regularly update your plan can create its own unique set of problems that can leave your family worse off than if you’d never created a plan at all.
The following true story illustrates the consequences of not updating your plan. It happened to a good friend of mine.
When my friend was in law school, her father-in-law died. He’d done his estate planning or at least he thought he did. He paid a Florida law firm roughly $3,000 to prepare an estate plan for him, so his family wouldn’t be stuck dealing with the hassles and expense of probate court or drawn into needless conflict with his ex-wife.
And yet, after his death, that’s exactly what happened. His family was forced to go to court in order to claim assets that were supposed to pass directly to them. Additionally, they had to deal with his ex-wife and her attorneys in the process.
My friend couldn’t understand it. If her father-in-law paid $3,000 for an estate plan, why were his loved ones dealing with the court and his ex-wife? It turned out that not only had his planning documents not been updated, but his assets were not even properly titled.
My friend’s father-in-law had created a trust so that when he died, his assets would pass directly to his family and they wouldn’t have to endure probate, but some of his assets had never been transferred into the name of his trust from the beginning. Since there was no updated inventory of his assets, there was no way for his family to even confirm everything he had when he died. To this day, one of his accounts is still stuck in the Florida Department of Unclaimed Property.
My friend thought for sure this must be malpractice. But after working for one of the best law firms in the country and interviewing other top estate-planning lawyers across the country, she confirmed what happened to her father-in-law wasn’t malpractice at all. In fact, it was common practice.
When I started my practice, I did so with the intention and commitment that I would ensure my clients’ plans would work when their families needed it so my clients would not suffer the pain my friend’s family did.
Keep your plan up to date
I hear similar stories from my clients all the time. Indeed, outside of not creating any estate plan at all, one of the most common planning mistakes I encounter is when we get called by the loved ones of someone who has become incapacitated or died with a plan that no longer works. By the time they contact me, however, it’s too late.
I recommend you review your plan annually to make sure it’s up to date, and immediately amend your plan following events like divorce, deaths, births, and inheritances. We have built-in systems and processes to ensure your plan is regularly reviewed and updated, so you don’t need to worry about whether you’ve overlooked anything important as your life changes, the law changes, and your assets change.
You should also create (and regularly update) an inventory of all your assets, including digital assets like cryptocurrency, photos, videos, and social media accounts. This way, your family will know what you have and how to find it when something happens to you, and nothing you’ve worked so hard for will be lost to the State Controller’s Department of Unclaimed Property.
I’ll not only help you create a comprehensive asset inventory, but I’ll make sure it stays up to date throughout your lifetime.
Properly title your trust assets
When you create a trust, it’s not enough to list the assets you want it to cover. You have to transfer the legal title of certain assets, including real estate, bank accounts, securities, brokerage accounts to the trust, in a process known as “funding” the trust, in order for them to be disbursed properly.
While most lawyers will create a trust for you, few will ensure your assets are properly funded. I’ll not only assist you in properly titling your assets when you initially create your trust, I’ll also ensure that any new assets you acquire over the course of your life are inventoried and properly funded to your trust at your Trust Review meeting.
This is important to protect your assets from being lost, as well as prevent your family from being inadvertently forced into court because your plan was never fully completed.
Keep your family out of court and out of conflict
As a qualified estate planning law office, our planning services go far beyond simply creating documents and then never seeing you again. Indeed, we’ll develop a relationship with your family that lasts not only for your lifetime, but for the lifetime of your children and their children, if that’s your wish.
We’ll support you in not only creating a plan that keeps you family out of court and out of conflict in the event of your death or incapacity, but we’ll ensure your plan is regularly updated to make certain that it works and is there for your family when you cannot be. Contact us today to get started with a Family Wealth Planning Session.