Category: Estate Planning

Will You Avoid These Estate Planning Mistakes?

Too many wealthy households commit these common blunders.

Many people plan their estates diligently, with input from legal, tax, and financial professionals. Others plan earnestly but make mistakes that can potentially affect both the transfer and destiny of family wealth. Here are some common and not-so-common errors to avoid.

Doing it all yourself. While you could write your own will or create a will, it can be risky to do so. Sometimes simplicity has a price. Look at the example of Aretha Franklin. The “Queen of Soul’s” estate, valued at $80 million, may be divided under a handwritten or “holographic” will. Her wills were discovered among her personal effects. Provided that the will can be authenticated, it will be probated under Michigan law, but such unwitnessed documents are not necessarily legally binding.

Failing to update your will or trust after a life event. Relatively few estate plans are reviewed over time. Any major life event should prompt you to review your will, trust, or other estate planning documents. So should a major life event that affects one of your beneficiaries.

Appointing a co-trustee. Trust administration is not for everyone. Some people lack the interest, the time, or the understanding it requires, and others balk at the responsibility and potential liability involved. A co-trustee also introduces the potential for conflict.

Being too vague with your heirs about your estate plan. While you may not want to explicitly reveal who will get what prior to your passing, your heirs should understand the purpose and intentions at the heart of your estate planning. If you want to distribute more of your wealth to one child than another, write a letter to be presented after your death that explains your reasoning. Make a list of which heirs will receive collectibles or heirlooms. If your family has some issues, this may go a long way toward reducing squabbles as well as the possibility of legal costs eating up some of this-or-that heir’s inheritance.

Leaving a trust unfunded (or underfunded). Through a simple, one-sentence title change, a married couple can fund a revocable trust with their primary residence. As an example, if a couple retitles their home from “Heather and Michael Smith, Joint Tenants with Rights of Survivorship” to “Heather and Michael Smith, Trustees of the Smith Revocable Trust dated (month)(day), (year).” They are free to retitle myriad other assets in the trust’s name.

Ignoring a caregiver with ulterior motives. Very few people consider this possibility when creating a will or trust, but it does happen. A caregiver harboring a hidden agenda may exploit a loved one to the point where they revise estate planning documents for the caregiver’s financial benefit.

The best estate plans are clear in their language, clear in their intentions, and updated as life events demand. They are overseen through the years with care and scrutiny, reflecting the magnitude of the transfer of significant wealth.


1 – [5/20/19]






Everyone should have a will.

If you die without a valid will in place, state law will determine how your assets are distributed to your heirs.

The question is, when do you need more than just a will?

You see the ads all the time: “Should you have a living trust?” There is no pat answer. The more complex your estate becomes, the greater the need for an estate strategy. A living trust could play a role in that strategy.

While not everyone needs a living trust, some estates create them with an eye toward streamlining the transfer of specific assets.*

*Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.

Why a living trust?

Think of a living trust as a step up from a basic will. It is designed to carry out the basic functions of a last will and testament, and in addition, it also offers you (the trustee) four important potential benefits.

First, assets in a properly written and funded living trust are positioned to potentially avoid probate. Wills are commonly probated, especially if an estate is large or complex. In some states, the probate process can drag on for months, even years.

Second, a living trust is a private document. A will filed in probate court enters the public record, and may be examined by anyone. There may be financial circumstances and beneficiary decisions that you wish to keep private, especially with regard to your legacy or your reputation.

Third, a living trust strategy can incorporate a financial or health care power of attorney. These documents can instruct your loved ones on what to do if you become severely disabled, gravely ill, or incapacitated. They give a trusted party the power to act legally on your behalf. Additionally, with a living trust, your spouse (or other alternate trustee) can be instructed to manage your affairs as soon as you are unable to, without courts interfering.

(It must be noted that not all financial institutions will recognize a durable power of attorney by itself, especially if it was created some time ago. There are also occasions when they may not recognize a valid living trust.)

Fourth, a living trust lets you transfer assets to your heirs with conditions attached, if you so desire. You can control the way assets are distributed, even after you die.

Typically, a living trust is revocable. That means that you can make changes to its terms while you are alive. Upon your death, it becomes irrevocable, meaning its terms cannot be changed unless all the named beneficiaries of the trust approve the changes.

Why not a living trust?

Okay, so with all these potential advantages … why doesn’t everyone have a living trust? The fact is, some people have relatively simple estates, and not everyone needs a living trust – at least not right away.

A well-written will and durable power of attorney may suffice until you hit your sixties. If you are married and pass away before then, the assets you and your spouse hold in joint tenancy or as community property may transfer to your spouse without being probated.

Should you create a living trust in your forties or fifties, you may end up revising the trust again and again over the decades to come. Certain life events – such as a divorce or a marriage – may demand that the trust be updated. There is also another risk worth noting – the risk that you might forget to revise a trust created “eons ago.”

Some people do get lax with their living trusts in another way – they have one drawn up, but they never transfer any assets into it. They treat it like an “option” they can use in the future. If they die without placing their investment accounts, real estate, etc. into the trust, those assets could be exposed to probate. If so, the trust will be meaningless.

Why not a will and a trust?

You may want (or need) to have both. Chances are, you will not put 100% of your assets into a living trust; your will can direct where assets left outside the trust should go when you die.

Alternately, a pour-over will may be used to transfer designated assets held outside the trust into the trust, to help your estate distribute those assets according to the trust terms. So, wills and trusts can work hand-in-hand.

What’s right for you?

You may be wondering whether a living trust is appropriate. Or you may have one, but believe it needs revisiting. You may sense that you need to adopt an estate strategy, or expand one. Trusts are complex, and a professional can help. I can be your resource for ideas and answers. Contact me, so that we may begin our search for those answers together. I am happy to speak with you.

1 – [7/18/19]
2 – [7/19/19]
3 – [3/7/19]
4 – [7/29/19]
5 – [8/13/19]
6 – [5/28/19]
7 – [3/12/19]