Aside from not preparing any estate planning documents, here are some more common mistakes our office has seen with estate planning documents.
Not leaving instructions on where to find trust and will documents.
Put your originals in a safe place. We do not recommend a safe deposit box. Once you are gone your trustee needs authority to get into that safe deposit box and the authority is in the documents locked in the box. That doesn’t really work.
Make sure you tell your successor trustee where those documents are, or at minimum, give them your attorney’s contact info. So if something happens, they can call the office.
Sometimes a client calls and says “We have unsigned copies of these documents that they created, but we don’t know if they signed them or where the signed copies would be.” If you are very clear and very specific, people know where to find your important documents. It makes it easier on your loved ones.
For those more tech savvy people, scan and keep digital copies of your documents and tell your successor trustee where those files are and how to access them. You can even give them a thumb drive with the documents.
Not working with an estate planning attorney.
Estate planning is complicated and there are a lot of traps for the unwary, even unwary attorneys. Find someone who is a specialist, who knows how to navigate issues, and who you feel comfortable with. Do not have your CPA create your estate planning documents, or your financial advisor. Don’t let your divorce attorney prepare your estate planning documents. They may be great at dissolution but estate planning may not be their area of expertise. Find an attorney specializing in estate planning.
You don’t think through whether the gift you leave someone will actually help them at the time of your passing.
Another mistake that people make is to not carefully considering the consequences of the bequests that they make. Yes, leaving people money is an empowering thing. But sometimes those same bequests can cause a lot of problems for the person receiving the gift. When leaving money to children, some consideration should be given to the child’s maturity and place in life. An 18-year-old may be a legal adult, but is probably not in a good place in life to receive an inheritance, even a relatively modest one. Receiving gifts outright might disqualify a college-aged person from financial aid.
For those beneficiaries in their midlife, some consideration should be given to the risk of divorce, creditors or vices such as substance abuse or gambling addiction. You should also consider if a beneficiary is receiving benefits like disability. Receiving an inheritance could disrupt benefits for a special needs relative or loved one. In each of those cases, the inheritance you may have intended to benefit a friend or family member could wind up in the hands of someone else and/or not help your loved one at all — and maybe even hurt them.
Gifting an automobile and not leaving instructions where the title is (pink slip).
If you plan to give a family member, or friend a vehicle, make sure you put the pink slip in a place where it can be found. If a pink slip is lost replacing it could take years. Depending on the situation, a new pink slip may not be so easy to request through the DMV. Registration for the vehicle may need to be paid, insurance may need to be updated and if there is a lien on the vehicle, that will need to be paid off. Once those things happened a new pink slip can be requested through the DMV. The DMV or the vehicle manufacturer may want copies of death certs, trusts docs, and driver licenses. Vehicle manufacturers have Probate departments to handle situations like this. If necessary, give that department a call and ask what documentation they need in order to request a duplicate title from them.