By Steven J. Gibbs, Esq.
Hello Friends & Colleagues!
Here at Health and Wellness, it is National Hospice Pal¬liative Care Month. It goes without saying that in hospice, many reflect on how they will be remembered. In thinking about a legacy, the last thing that most people want is to be remembered for a mistake…or what they did not do.
For example, James Gandolfini, the highly acclaimed “Sopranos” star, passed away at age 51 with an estimated 70 million dollar estate. Although he updated his will just 6 months prior to his death, his estate plan included little estate tax planning and his estate owed an estimated 30 million in Federal estate taxes. His last will was described as a “tax disaster”.
So this article is all about taking care of your legacy by avoiding seven “dumb” mistakes that people often make with their estate planning.
1. At the top of our list is a failure to make proper beneficiary designations on your insurance policies, IRAs, 401ks, Annuities, etc.
If the beneficiary designation on your account is “the estate of” (or something to this affect), then that asset will need to go through the probate court process in order to be distributed to your beneficiaries. What that means is, instead of the insurance company simply “cutting a check” to your beneficiaries, the entire account will be tied up in a court for potentially 6 months or more and will be subject to probate fees of approximately 1%-10% of the asset value. You can do the math on a $500,000 insurance death benefit, and this could have been prevented in 5 minutes with a simple beneficiary designation change.
2. Failure to have documents properly witnessed or notarized.
This one could be described as a “legal zoom” specialty. Unfortunately, the “form pusher” websites often do not explain the formalities necessary to properly execute estate-planning documents. This type of error can result in a “last will” not being admitted to probate or being disqualified due to an “interested witness” having witnessed the will and also receiving a share of the estate.
3. Failure to retitle assets in the name of a Living Trust.
It is extremely common for folks who have gone through the expense and effort of setting up a Revocable Living Trust and thereafter forget to “fund the Trust”. The net result of a failure to fund a Living Trust is that all of the assets must go to probate. To review a recent blog article about “Trust Funding Tips” visit: http://www.gibbslawfl.com/is-your-revocable-living-trust-feeling-empty-trust-
4. Failure to appoint the right family members to the right positions.
I have marveled on occasion why a deceased parent with a reasonable estate plan and some assets upon death appointed “hothead Timmy” as the Personal Representative of the estate at the expense of 4 other siblings. This move can lead to estate litigation, which can drain an estate faster than a Florida sinkhole.
5. Opting out of Trust planning under the assumption that “everyone will just get along”.
Often times, folks who get a bit overwhelmed with the estate planning process conclude that a simple will is the easiest answer for the estate. It is easy to forget that simple wills must be reviewed by a Judge in probate, and, in most cases, more a simple will can leave a lot of grey areas. When things are omitted in the name of “simplicity”, people often times do the opposite of getting along.
6. Failure to Consider the Implications of Jointly Titling Assets With Adult Children.
Under the guise of a “simpler plan”, some conclude that it is a great idea to just put the kids’ names on everything. This move exposes the parents’ assets to all of the potential legal hassles of the adult children. For example, a few years ago, Tommy was an upstanding young man with a great job and picture perfect marriage. Fast forward, and Tommy is in the midst of a heated divorce and a full-blown economic crisis. Sorry mom and dad, your assets are now entangled in Tommy’s legal affairs and this cannot be easily undone. All of this could have been avoided through proper Living Trust planning.
7. Failure to have any estate planning documents.
I couldn’t close this article without mentioning the most obvious…folks look dumb when they die and did absolutely nothing to address what should happen to the estate. When people fail to prepare any estate documents, family member look back in frustration because the probate court has to apply the default statutory guidelines and this is often not what the deceased would have preferred.
Avoiding the 7 mistakes is not just the smart thing to do, but will protect your legacy for generations to come.
As always, I hope this was helpful and . . .
Until next time.
Steven Gibbs founded the Gibbs Law Office in January 2009, committed to providing client-centered legal services.
Steve as he would rather be called, is not your typical attorney. If you appreciate the staunch egotistical mannerism of most firms, you will be delighted with Steve’s unpretentious approach to educating and then assisting his client. Instead of giving you his complacent and lofty ideas, he would rather pursue your expectations with professional conversation about resolving your concerns under the Law. It’s your life and it’s his job to make your legal expectations come true while using years of his guidance and knowledge.
Steve was admitted to the Minnesota Bar in 1999, the Florida Bar in 2007 and was recently admitted to the California bar. Keeping abreast of law changes in these three States, as well as the United States, assists him in all aspects of the types of law the firm practices.
Along his career path, he was an associate attorney for an insurance defense law firm; an in-house real estate negotiator for Target Corporation; and corporate counsel for Civix, LLC and Vice President for North American Properties where he was responsible for various real estate transactions, including legal issues and negotiating unresolved business issues. Prior to opening Gibbs Law Office, PLLC, he was an associate with the firm of Roberts & Engvalson, P.A. where he gained his knowledge of trusts, estate planing and Wills. He opened his own firm in 2008 and now focuses on laws that will enrich the needs of his clients throughout their lives and those of their children. The firm has developed a practice dealing only with Trusts and Estate Planning, Wills, Medicaid Planning, Elder Law, Real Estate, Business Law and Probate.
Quoting from Steve “I decided to practice in areas that families will need as they progress down life’s path. To help them with a solid foundation that will carry them throughout there lives is a rewarding experience for me and my staff.”
GIBBS LAW OFFICE
www.gibbslawfl.com . email@example.com