Thursday, September 18, 2014

5 Common "Don'ts" of Estate Planning

The first step in customizing your estate plan is to contact an estate planning attorney to discuss your family and financial situation and your goals for your estate.  When creating your estate plan, be mindful and avoid these five common mistakes along the way:
1. Don't Assume Estate Plans Are Only for the Super Rich
Society and movies would have us believe that only the superiorly wealthy members of society are entitled to an estate plan.  This is simply not the case--everyone over the age of 18 requires some kind of estate planning. 
The average college student or young adult may not require a living trust or full-blown complicated plan considering tax consequences; however, young adults would benefit from at least a durable power of attorney and medical power of attorney.  Without these documents, an incapacitated person over the age of 18 would require a guardian to handle financial, medical, and day-to-day affairs.  Guardianship costs money that would not otherwise be spent if a power of attorney were properly executed. 
New parents should update their estate plan to appoint potential guardians for their child or children.  In the flurry of checklists and preparations for the arrival of a new baby or adopted child, parents do not always consider updating their Will to designate a guardian should anything happen to them.  While the Texas Estates Code provides for what may happen to your child, a parent's judgment and choice of guardian is almost always preferable to a selection made by an impersonal statute.
2. Don't Assume Your Financial Matters are Simple Enough without an Estate Plan
Consider your "simple" bank accounts.  Who else is a signatory on that account?  Is it a POD (payable on death) account?  If so, the beneficiary named on the account will rightfully have a 100% personal interest in those funds when you die.  Did you intend to leave 100% to one child or did you want that to be split among all your children? If your intention is that your children each share equally in the money in that bank account, you must designate that in your estate plan and on the beneficiary designation of the bank account--otherwise, the single beneficiary named could rightfully keep all the money in the account.  Without instructions to you otherwise, the implication is that you intended the one child named as the POD beneficiary to inherit all the money with the other children excluded.
3.  Don't Assume Everyone Knows What You Want and Will "Do the Right Thing"
Attorneys hear the phrase "I know my [daughter/son/brother] will do the right thing" on a regular basis.  The fact is that only you can adequately and accurately express what you want and what "the right thing" really means to you.  Consider the above example: Was it understood that the POD beneficiary was to split the money in the account equally with his siblings?  Spell that out for him! Do not assume that your executor or beneficiary will know what you want.
Also, consider that your executor--especially a family member--will be dealing with grief when you pass away, and to have a clear roadmap of what you want and how you want to share your estate or personal items with people will hopefully ease that pain.  Even if the task is still difficult, your executor can at least have a roadmap to show an attorney to help guide them through the probate process.
4. Don't Forget About Your Digital Assets
We live in a digital world.  Cloud-based technology houses our photographs, notes, bank accounts--and don't forget about how much information is shared on Facebook or other social networking sites!  Without the usernames and passwords to those accounts, your loved ones may not even know where to look for photos to remember you or bank accounts that hold estate assets.  Make a list of these specific usernames and passwords and keep it updated and with your estate planning documents.
5.  Don't Wait
You only have the opportunity to execute documentation determining the disposition of your estate while you are of sound mind.  Consider that more and more people are living longer, but with Alzheimer's or dementia.  Once you are determined to be legally incompetent, you cannot select your power of attorney or direct how you want to dispose of your estate--in fact, you may not be able to communicate your wishes at all.  Rather than ask your family to engage in guardianship proceedings which can be costly, designate your powers of attorney now and enjoy the life and time you have with your loved ones.


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