The estate documents are one of the most important segments of anyone’s financial plan. Without them, there is no certainty that the estate will be distributed as desired and whether steps to assist and protect the heirs will be in place. But, for most of us this is an area where little time is spent once the documents are complete. As a result, this is where mistakes can occur.
Taking time to create a plan clearly avoids one of the primary mistakes commonly made, not having adequate documents in place when they are needed. Another mistake often made involves older documents. This comes under the heading of failing to periodically review existing documents to make sure what was appropriate five years earlier still stands as the best course of action. It is possible the lovely couple named as the potential guardian for your children now lives in Japan due to a transfer, or perhaps they are no longer a lovely couple and it is time to name a new prospective guardian for the children. There are other areas within the documents where “life” changes have occurred, and periodic reviews will permit these to be corrected.
For certain clients, it may be desirable or best to use a living trust rather than the traditional will. While trusts offer many benefits in my opinion, they can require a little more work and attention on behalf of the couple/individual. Like any other document, they should be reviewed occasionally. And in the event a move across state lines occurs and a new attorney relationship is established, the new attorney should be given a copy of the trust. The last thing you want to occur is for the new attorney to provide additional estate planning guidance without the knowledge of the existence of the living trust. Nasty things can occur when this happens.
In fact, while still practicing in Texas, one of my senior clients decided to move to a neighboring state. They had an up-to-date estate plan including a living trust; and unless their desires changed, little had to be done. Due to their move, advancing age, and assistance of a close friend, they opted to find new local council and manage their investments on their own. That was over ten years ago, but I recently received a call from a Texas attorney regarding the estate of my past client. It appears my past client had obtained new council and filed a new will, since some of her wishes had changed. The friend was now the sole beneficiary of the estate per the new will. Several years after the passing of my client, they sold a vacant lot they had inherited, accepting payments over many months and now the attorney was trying to obtain a proper deed to the property.
Unfortunately, either my past client had forgotten about their living trust or the new attorney did not inquire, but the lot and home owned by my client was in the trust which had been created years earlier. Additionally, the disposition of assets per the trust did not match the new will; and because of other changes made, there was no income in the trust to take care of the real estate assets.
What should have been very simple is now an issue to be resolved by more attorneys in order for her property to have clear title and transfer ownership. Once a living trust is created and assets are transferred to the trust, they must be transferred out of the trust if the trust is no longer to be used.
Estate planning does not have to be difficult; but without proper care and attention, it can clearly end up with unintended outcomes.
For assistance with insurance, estate planning, and investment management, 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.