About four times per year I am contacted by an individual who found himself or herself unintentionally disinherited by a deceased parent. It is very sad when that happens because more often than not there is absolutely nothing that can be done to repair the situation because what happened was perfectly "legal".
If you’re like most people, you have the best of intentions regarding how you want your estate distributed when you die or your affairs handled should you become incapacitated. Unfortunately, without proper planning, your best intentions may not be enough. Here are six of the most common estate planning mistakes people make:
My advice is to leave the will in the safekeeping of whomever stands to lose the most if the will is "disappeared".
DIY Estate Planning Mistake #16: How to Help an Elderly Parent Manage Credit Card Account the Right Way
Just like it is a bad idea to add yourself (you being the adult child, friend or other helper) to the elder's bank accounts as a co-owner, it is a bad idea to add yourself to the elder's credit card accounts as an "authorized user". That method "works", but there's a downside, which is the elder's credit card account will now appear on YOUR credit report. If they have a high balance compared to the available credit, or just a high balance in general, or a poor payment history, these things could negatively affect YOUR credit score.
Some do-it-yourselfers have tried to transfer real property to another person, to be effective at death, by signing and acknowledging an actual deed but then hide the deed in a desk drawer or safety deposit box to be found when the grantor dies, expecting that the grantee can then take the deed to the recorder's or register of deeds office and record it. This technique does not work . . .
Here is DIY estate planning mistake #17: Putting the names of one or more additional persons on your bank and brokerage accounts. This is poor planning for many, many reasons. Here are some of the reasons, in no particular order.
Estate planning and long-term care planning are examples of things that may seem easy to take care of by yourself or by using an online program, but in most cases, legal planning is one area where you should resist the urge to D-I-Y.
Gifting a home outright to a child during lifetime is almost always a bad Medicaid pre-planning strategy. Click through to read more.
DIY Estate Planning Mistake #12: Making Outright Gifts of Cash (or Cash Equivalents) to Qualify for Medicaid
Some people do only enough research to figure out that you have to be nearly broke to qualify for Medicaid, so when it starts becoming apparent that they are going to need long-term care, they quickly gift things to their children and/or other people, which can result in a long Medicaid penalty period. Unless they are lucky enough to somehow convince the recipients of those past gifts to gift them back to pay for your care, you end up paying for those gifts twice. Even worse, the private pay rate is virtually always higher (a lot higher) than the Medicaid rate, so you end up having to pay out of pocket substantially more than the value of the gifts that you made.
A secret trust is created when an individual entrusts property to another person with the understanding that the second person (let's call him the "trustee") should hold the property for the benefit of a third person (let's call him the "beneficiary"). The problem is, none of this is in writing. It's secret.
This is so sad when it happens. It is a question that comes up a lot in online ask-a-lawyer forums. The question goes something like this: "My boyfriend owns the condo in which we have been living together for the past ten years. What happens if he dies? Will I have to move?"
Some people have been known to take a perfectly good attorney-prepared estate plan and tinker with it on their own. A classic example is crossing out names and writing in different names by hand. Another example is crossing out a bequest, either because the testator has changed his mind about giving it to a particular person or he no longer owns the item.
In order of priority, this mistake really ranks #2 behind DIY Mistake #1: Not Having An Estate Plan, but I had already posted mistakes 2 through 6, so this is going to have to be #7. Human beings tend to procrastinate when a task they KNOW they need to do seems overwhelming or too expensive or ...
A typical DIY estate plan relies heavily on non-probate transfers such as joint tenancy and beneficiary designations. Anything not transferred pursuant to non-probate transfers goes through probate under the laws of intestate succession or pursuant to a simple will. All such transfers result in...
I alluded to this mistake in an earlier post, but it really deserves it own article. Many DIY-ers unwittingly get into trouble due to their ignorance regarding the interplay between various estate planning techniques. This is another topic that is best explained using examples. Example 1: Wif...
This particular one shares one unique characteristic in that it is a mistake that can and often is also made by people who have paid good money for a well-constructed estate plan! Ugh!
Plenty of my clients use these techniques in addition to their will and their trust(s). They have their place in estate planning as long is the choice is made in an intentional, conscious, educated, and informed manner. The problem is too many people don't think it all the way through, if they think about it at all, usually because they are not aware that they SHOULD think it through better. They don't know what the alternatives are or what questions they should be asking.
Here is DIY estate planning mistake #1: Putting the names of your intended heirs "on the deed"* to real estate, often the primary residence but sometimes other real property as well. This is poor planning for many, many reasons. Here are some of the reasons, in no particular order.
A surprising percentage of the population does not have an estate plan, not even a simple will. This is a mistake for anyone over the age of 17. There are almost too many reasons to list, but I will make an attempt here.