Mistake #1: Relying on the Law. If you do not set up an estate plan, upon your death your property will be distributed according to the laws of your last state of residence. Often, the law will require the probate judge to give your property to someone other than the people you would have chosen.
Mistake #2: Relying on a Will. If your estate plan consists only of a Will, your heirs may face many costly problems such as probate and conservatorship proceedings. A Will is the most common estate planning tool, but it is usually not the best tool to use.
Mistake #3: Relying on Community Property laws. Relying on the Community Property laws is a position many clients take. However, your property will still have to go through probate on the death of the spouse. Also, Community Property ownership requires a conservatorship if a spouse is incapacitated and the home needs a mortgage, home equity line, or to be sold. Relying on the Community Property laws is not a good estate plan.
Mistake #4: Relying on Guardianships. These Court supervised proceedings for addressing your physical or mental incapacity are costly, time-consuming and horribly burdensome. Your properly set up Revocable Living Trust, as well as Powers of Attorney, Durable Powers of Attorney for Health Care, and Physician’s Directives and Releases avoid this issue.
Mistake #5: Relying on the small estate affidavit or informal administration procedure to avoid probate. Most people assume they have fewer assets than they actually have. In Wisconsin the small estate exemption that avoids probate is permitted only for estates consisting of less than $50,000.
Mistake #6: Relying on a gifting program as your way of avoiding probate. The law allows you to give away your property at a rate of $14,000 per person per year. A married couple can give $28,000 per year to anyone they choose without gift tax consequences. While this is an effective way to reduce the size of your estate, trying to spend your last dime on your last day is difficult to put odds on, plus you lose control of the assets you have given away, and beneficiaries get total control over everything that has been given to them.
Mistake #7: Relying on the Courts to take care of your child’s finances. If you die intestate (with no Will) or with only a Will, and your property passes to your minor child, the Court will put your child’s money into a Court-supervised guardianship requiring at least annual accountings to the Court. Naturally, this may require hiring CPAs to prepare accountings, and lawyers to file those accountings with the Court, plus filing fees, all of which comes out of the inheritance. It also means that the Court determines the person who will serve as guardian of the property, who may not be the person you would have chosen.
Mistake #8: Relying on a form kit for your Will or Living Trust. One size does not fit all because no two people or families are alike. From your family’s needs and dynamics to its personalities and values, can you imagine any form kit ever being suitable for any family? If you use a form kit, you’re asking for problems. If your will is not properly executed, it will not be valid. The only estate plan you can rely on is one that is custom prepared by a qualified estate planning and asset protection lawyer.
Mistake #9: Relying on the wrong attorney. Most attorneys know very little about estate planning. What’s more, even some estate planning attorneys don’t put much time or energy into comprehensive protections for your family’s unique circumstances. That’s why I urge you to choose an estate planning attorney who has the primary focus, mission and purpose to help you achieve your family’s estate planning and asset protection goals: protecting, preserving and passing on more of what you’ve worked for.
If you’d like to ensure that you maximize the resources available to your loved ones and keep your family out of Court and out of conflict, schedule a Family Life and Legacy Planning Session.™ We can review your existing plan and help you make adjustments that will help you achieve your goals.
This article is a service of The Estate Planning Group and Davidson Law Office, LLP, your Life & Legacy Planning Lawyers, who believe in developing trusting relationships with families for life. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.