(san diego union tribune) -- Let’s talk about death. Specifically – have you planned what will happen after yours?
While this may seem like a grim topic, it’s an important one. Without a proper will in place, your family may spend years mired in court proceedings and legal fees to settle your estate.
Local attorney Yvonne Amrine knows these issues can be difficult to talk about. Amrine was devastated when her mother was diagnosed with Alzheimer’s disease and overwhelmed as her family faced the mounting costs of 10 years of professional care. In another tragic twist, Yvonne’s two older brothers died just before their mother passed away in 2016.
“I never expected to have to deal with so much loss at once, but that is exactly what happened,” Amrine explained.
“This brought home to me the idea that with a few simple documents, much of the pain and frustration of caring for each other can be avoided. With a good plan, even crisis situations are more manageable.”
That idea led to her creating the San Diego Planning Partnership, a nonprofit to advise people on estate planning and long-term care. The organization holds free educational workshops each quarter, with the next one scheduled for May.
Amrine says that without a plan, everything is more difficult and costly. Here are the top six estate-planning mistakes she urges people to avoid:
- Not planning at all. There are plenty of excuses for not thinking about what would happen if you become incapacitated or die. Being young and healthy is not a guarantee. No matter your age or financial status, it’s important to get the basics in order. Setting up Powers of Attorney for both healthcare and finances is a great place to start. If not, you risk the court system gaining control of vital decisions down the road.
- Failing to communicate. Once you have a plan, let your loved ones know what it is. The people you’ve named to take care of you need to know what you’ve written down and where to find your plan. A good plan does not sit in a drawer somewhere gathering dust. It needs to be communicated to those you have named or it will do you no good!
- Planning only to avoid taxes. Taxes can be avoided with a good financial plan, but estate planning encompasses much more than that. There are many reasons to create an estate plan that have nothing to do with taxes. For example, charitable giving, planning for a special needs family member, succession planning for yourself in case of incapacity, management of a business, and planning for children of a prior marriage all come to mind. These issues each require more than a financial planner or beneficiary designation form to execute properly.
- Leaving assets directly to minors. Leaving assets directly to your children or grandchildren who have not reached the age of 18 may cause unintended custodian or guardianship issues. Minors cannot own legal property of any kind in their name. A guardian must be appointed by the court to manage the property on their behalf until they reach they turn 18. If you do not name one, then the court will appoint one for you – one who may have very different ideas about how the account should be managed and invested.
- Ownership and title oversights. Many of our households are made up of blended families. We may want to preserve assets from our inheritance as our own separate property, or from a prior marriage for our children. There are tax consequences and control issues abundant in these blended family households that don’t seem so apparent on the surface. Moreover, here in California, we live in a community property state. If we are not careful, a separate property brought in to the marriage by one spouse can accrue a community property interest over time, leading to inheritance complications down the road.
- Failure to properly fund or update your trust. An unfunded trust is a just fancy paper! Have you completed your plan by properly funding it? Assets not titled in the name of your trust do not avoid probate.
Good estate planning is never truly done.
As your circumstances change and evolve over the years, your plans need to be kept current and apace with them.
Have you experienced the death of a spouse or child?
Have you gotten a divorce? Has a charitable organization you designated changed names?
Even refinancing your home can cause your trust to become outdated, as some lenders require the home to be financed in your individual names, changing the title in the process.
It’s important to check in with an estate-planning expert regularly to make sure your trust is in good shape.
