Estate planning is an essential aspect of personal finance, and it involves transferring your assets and properties to your beneficiaries after your death. While estate planning can be complex, you can avoid some common mistakes to prevent problems that may result in unintentional consequences.
But before you learn these four estate planning errors, know first what tools apply to your situation. Also, understand the benefits of hiring a trusted estate planning attorney to handle your affairs. Read on to learn more.
What Is Estate Planning?
Estate planning involves transferring your assets to your designated beneficiaries after your passing. The process includes creating a plan to manage and distribute assets, such as property, money, and investments, to beneficiaries or heirs. It ensures that your assets are distributed according to your wishes.
Others also create trusts or wills under their plan to minimize expenses, taxes, and legal complications associated with asset transfers. It also involves naming beneficiaries for assets, selecting an executor or trustee, and establishing powers of attorney for healthcare and financial decisions.
It is vital to engage in estate planning to protect one’s assets, and ensure that loved ones are taken care of. It also helps avoid disputes and conflicts among family members during the probate process. This process seems straightforward. But despite that, many commit errors when creating one. The following discusses the four common mistakes you should avoid when creating your estate plan.
What Are The Four Common Mistakes To Avoid?
There are several reasons why people make mistakes when creating an estate plan. Law firms all over the state have seen these happen all the time, but you don’t have to go through them. Learn how you can avoid the following mistakes.
DIY Method
While DIY (do-it-yourself) projects can be a fun and rewarding way to tackle home improvement projects, creating your estate plan is not recommended. There are complexities along the process, and you may omit to do something. This method can invalidate your documents and cause problems for your loved ones.
For example, suppose you have a little plumbing problem at home. You go back and forth to Home Depot six times in one Sunday to fix that, whereas a plumber could come in and fix that in one go. That’s the same thing with estate planning. You just haven’t done it a thousand times before to do it on your own.
One of the common mistakes with a DIY method is that some people don’t write their ideas correctly and clearly. For example, you may have a clear idea in your head that all your assets will go to your loved ones. It may sound simple, but then you pass away. However, problems may arise when heirs discover that your last will is not a valid will. Of course, in the absence of a valid last will, the probate court will oversee the distribution of your assets. That’s where it can get complicated.
The probate court may look at the estate plan and think it’s a little vague, and there might be technical loopholes. So, they will notify all of the decedent’s family members, even the long-lost ones, saying that they may have a claim to that estate. And then, two years of intestate probate will likely follow.
Remember, when you do your estate planning, it might be clear in your head, but you’ve got to use the legal wording so that it can’t be contested. That’s the real problem with the DIY language. When you use daily conversation words, they differ significantly from the legalese which the documents often use. That’s the first mistake.
Incorrect Signing Process
The second mistake is when you sign the documents the wrong way. Most of those who do this create the estate plan themselves. That is why you must be very picky when choosing the estate planning firm to prepare your documents.
Now, what happens with this mistake? Unfortunately, those unfamiliar with estate planning may sign all the documents, but they do it incorrectly. There are signature pages with precise words that require different signatories.
In Arizona, you should sign your last will in the presence of two witnesses who are at least 18 years old. They should also not be beneficiaries under the will. You can sign the will yourself or have another person sign on your behalf. This is allowed if you are physically unable to sign.
Your signature should be at the end of the will document. It should be made with the intent to authenticate the document as your last will and testament. Your signature should be made in the presence of the witnesses, and the witnesses must then sign the will in your presence.
These pages may also need a different number of witnesses and notarization language to sign them. For example, the testator or witnesses may completely forget to sign one of the documents in the stack of 12 documents. For that reason, the signing ceremony has to be done very carefully.
Failure To Fund The Trust
The third most common mistake people make is setting up a trust and not transferring their assets into it. You may wonder what it means to put assets in your estate plan. It is called funding, and this process makes or breaks your trust. If you fail to fund your trust, it will not work and becomes invalid. So to keep it valid, you must fund it.
Is that all you need to do when you put your house in it? No. You must also go through your regular, checking, and savings accounts, your bank, and your investment accounts. You should also check your 401k, your life insurance, your annuities, your car title, your real estate, and personal belongings on the house. You’ve got to fund your trust with everything you own. If not, your trust may end up in failure.
Not Updating The Documents
The fourth most common mistake most people make is not regularly updating their estate plans. If your trust is around 10 – 20 years old, surely, significant life milestones happened to you and your family. You may have had new kids, grandkids, cars, properties, or even a new spouse. Suppose the documents are not updated and you pass away, the family will find themselves in a tough situation.
For example, family members discovered that your asset information does not match the one when you die. They may have recently acquired properties that were not listed in the will. That would be a big headache due to the legal ramifications. The will and trust are invalid or unusable. They may end up in probate court under the intestacy rule so your assets may not be distributed according to your wishes. So to ensure your assets pass smoothly to your loved ones, keep your estate plan updated to make it valid.
Now, all these four mistakes may sound daunting, especially since all of these fall on you. It can be your lack of understanding of the process, the law, or lack of communication with the right people. That’s where Keystone Law Firm comes into the picture.
Hire An Experienced Estate Attorney
Keystone Law Firm is one of the respected estate planning firms in Arizona. How are they different from other law firms? They handle real problems with real solutions. They don’t just offer counseling to you as their clients. No, they believe that as your lawyers, they must solve your problems.
Estate planning attorneys acknowledge that they might be your last resort and will do everything for you. As their founder Francisco P. Sirvent said, “If it is a problem I can’t solve, I will find someone who can.” So, if you have any estate planning queries or plan to start one, don’t hesitate to call Keystone Law Firm for a free evaluation.
Summary
Estate planning is a complex process, so it’s no surprise that many make mistakes when going through it. Some common errors they make are creating the trust themselves, not signing the documents correctly, not funding the trust, and not updating their plans regularly.
While these may seem like menial errors, the consequences can be severe. You can avoid these mistakes by hiring a competent estate planning attorney within your area. Estate lawyers will ensure that the estate plan accurately reflects your wishes. Thus, providing financial protection to your loved ones even after you are long gone.
