Proper execution of an estate plan

Doug Horn

Today, there are many ways to derail a properly written Will. Whether you have used software to create the documents or an area attorney, having a recently signed estate plan is not always enough to avoid headaches when it is time to act on the plan.

The first cause of problems is an old plan. If your Will was signed more than five years ago or you have recently moved, had a child or new grandchild, death of a family member, personal divorce or a divorce among children, or another major event in your life, it is time to review and update the plan documents. Any of these events may cause problems when your plan is acted upon, or potentially some of your assets may not go to the heir you intended.

The second cause for errors in an estate plan is the belief that everything is fine once the documents are signed. Having an updated set of documents is clearly beneficial. The problem arises when there are assets that are intended to be controlled by the plan, but for whatever the reason, they are not. That is like getting a new car with all the perfect options, but forgetting to put gas in the tank and air in the tires. The car is all shiny and new, but it still will not do anybody much good without gas and air.

The title, registration and beneficiary statements of the assets you own are critical to avoiding problems and issues when it is time to rely upon the documents. If a certain investment account is named in the plan, but the account is held in joint tenants WROS, there is little that can be done to have the plan control the destination of those assets. The cause? The letters ‘WROS’ mean ‘with rights of survivorship’. This type of registration causes all the remaining owners on the account to become the owners of the decedent’s share. This happens automatically upon the death of one of the owners, and thus this account never becomes subject to the estate plan documents.

In my practice, I have found many individuals using ‘POD’ or ‘TOD’ statements on accounts as a means of estate planning. These statements ‘pay upon death’ or ‘transfer upon death’ act like a beneficiary statement and prevent the particular account from becoming subject to the estate plan documents. While the probate process may be avoided, other issues can arise.

Whether a Will or a trust is used in your plan, these documents provide many benefits when used properly. Thus, intentionally or accidently avoiding the plan documents can bypass many of the safeguards you may have established for your heirs, such as the immediate distribution of assets to someone in their twenties or thirties. While many may believe this is not an issue, it is rare to see someone of this age who is ready to be handed several hundred thousand dollars or more. This can happen, if the registrations are not adjusted to work with a new estate plan.

There are other similar landmines that can be found when each asset is reviewed to determine how it is titled or registered. It is very smart to perform this type of review every three to five years and then to confirm with a professional how each may or may not interact with your plan.

For assistance with insurance, estate planning, and managing investments, contact me at Quality Financial Concepts or one of the other Certified Financial Planners in our area. To continue a personal quest for education, you can also view our learning center on our website, www.goqfc.com. There you will find articles on a variety of topics, on-line seminars, calculators, as well as a host of other free tools.

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