A few blog posts ago, we talked about fie common estate planning mistakes that many people make. However, those are not the only five mistakes that someone can make. That blog dealt with mistakes with not having complete estate planning, if at all. Here are four more common mistakes that people can make, even if they have an estate plan. If you do not have any of these problems, then you can have more confidence that your estate plan will work like you want it to.
Four Estate Planning Mistakes
1. Not having a coordinated estate plan
Your life is complicated; so are your assets. It can be tough to make all these assets work together to fulfill your goals. Beneficiary designations, wills, trusts, deeds, and more all affect what goes to whom and how. Real estate or stock values may fluctuate greatly, while life insurance benefits are relatively stable. This may impact how much value individual beneficiaries receive. This is a complicated and tricky effort, and can become impossible if you become incapacitated or sick. If the worst should happen and a beneficiary pass away, that can change how your entire plan is structured.
Fortunately, there is an easy option. By making your trust either the owner or beneficiary of as many assets as possible, the trust then distributes out those proceeds according to the trust provisions. The maintains your vision because your beneficiary receives their assets as you wanted. In order to make any edits, you only need to change your trust, not multiple documents. You can also plan for the possibility that a beneficiary passes away. Planning through a trust is a powerful and efficient way to take care of your loved ones because it makes managing your assets so much easier.
2. Not funding a trust
A trust does not automatically control all of your assets. You have to make your trust the owner or beneficiary of your assets for the trust to be effective. This is called “funding” a trust. If you do not fund the trust, then a combination of either the will or Colorado “default” laws and your beneficiary designations will govern your assets. It is unlikely that these will fulfill your estate planning goals, as that is one of the reasons why you wanted a trust in the first place.
3. Not titling newly acquired assets in the trust’s name
Some clients do a good job with the initial funding. They create the trust and correctly fund it. However, life does not stop at that moment. You will surely continue to buys things and open accounts. These things also should be funding into your trust. “Ongoing” funding is another mistake that couples often make, as this outdates their estate plan. In this situation, the couple must again rely on a combination of their will or Colorado law and beneficiary designations of any property or assets not put into the trust.
4. Not using a qualified attorney
Estate planning is one of the most important decisions that you will make. Its consequences are long-lasting and can affect generations. Is that something that you really want to entrust to a kit or online program? It does not seem to be the best part of life to go bargain-hunting. A single mistake or non-Colorado specific provision can have drastic effects on your estate plan. It is imperative that you find a local and qualified estate planning attorney who understands Colorado law and provides comprehensive, personalized legal services that address your unique situation. We have seen how good estate plans bless families and how bad estate plans can tear families apart. It is in your best interest to find an attorney who can help you make good decisions about who will receive your assets, who will be a guardian for minor children, plans in the event of incapacity, how to protect your family from creditors, and other decisions.
Final Thoughts
For your estate plan to run smoothly, it needs to be free of mistakes and be up-to-date with your wishes, situation, and owned property. If you believe that your estate plan may be a victim of one of these mistakes, please contact The Rains Law Firm or schedule a meeting with me. I would be happy to work with you to develop your desired estate plan or review your estate plan to make sure it is free of any mistakes that may damage your strategy or legacy.