Don’t Step in That… Common Estate Planning Mistakes, Part 2

We pick up where we left off yesterday, regarding many common estate planning mistakes that can be avoided by consulting a qualified attorney (before it’s too late, of course).

6.  Failing to plan for incapacity.

I don’t know how accurate it is but I’ve heard it mentioned that the average American between the ages of 65 and 70 is six times more likely to suffer some form of mental incapacity than to die.  Given such statistics, it only makes sense to address incapacity in your overall estate plan, using such tools as Advanced Directives and Springing Powers of Attorney.  Failing to plan for incapacity can leave your loved ones with no authority to make important decisions for you regarding care and without access to your assets to pay for such care.

7.  Choosing the wrong appointees.

Selecting your personal representative (“PR”)/executor/successor trustee/health care representative/etc. is an important decision that should not be made based upon something as irrelevant as birth order or potential hurt feelings.  Choosing the wrong person(s) to serve in these roles can only lead to problems in  the carrying out of your express wishes.

Understand that the are positions of great responsibility, both to you and your heirs/devisees/beneficiaries.  As such, these positions should be appointed based upon trust and skill in dealing with potential conflict.  These positions can also involve a lot of work at times.  So, it is important to consider a potential appointee’s availability to give the position the time it demands.  Your daughter, the busy corporate lawyer, may well be qualified but still might not be the best person to represent you when you are gone.

It is also important to discuss the positions and responsibilities with the appointees beforehand, and in some cases a signed acceptance of the appointment may be required.

8.  Failing to name successors.

Choosing your appointees is important and difficult.  Just as important, and probably more difficult, is choosing the successors to those appointees.

Simply naming your PR in your will does not obligate that person to serve in that capacity.  And, though he or she may have agreed to serve before you executed your will, people’s life situations change.  A new job or family situation may not allow them the time to serve or, perhaps,  your named PR is more emotionally affected by your passing than he or she expected, leaving them unprepared to make important decisions.  In cases such as these, your named successor could take up the responsibility.  Without a named successor, however, the job could pass statutorily to an unqualified family member or even a complete stranger.

9.  Failing to properly fund your living trust.

One of the advantages of a trust is its potential to avoid the time and hassle associated with probate.  A trust, however, may only exercise control over assets to which it possesses title.  Failing to properly fund a living trust by transferring title to assets such as real property, financial accounts, etc., to the trust, thus leaving those assets in your name, could not only negate that advantage but also subject those assets to the claims of your creditors and result in the transfer of those assets to heirs other than those you intended.

10.  Believing that family will not fight over your estate.

Most everyone would like to believe that their children were raised to be above the petty squabbling that other families go through when a parent dies.  While this may be true of your family, it is never a bad idea to plan as if it weren’t.  Just as contracts are written to clarify both sides’ obligations and avoid issues where possible, a will or other estate plan should clearly state your wishes to minimize the potential for infighting.  This bickering will only be worsened if the will or other estate plan is faulty in one or more of the other ways this and other blogs have mentioned.

That’s all for now.  If you have examples of estate planning mistakes our office or another lawyer helped you avoid, or if you or a deceased loved one was unrepresented in the drafting of a will or other estate plan and managed to step squarely in one of these traps, leave a comment and we will consider a Part 3.

For informational purposes only and not to be relied upon as legal advice.

by Brook D. Wood

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