What could go wrong if you don't have a proper will? Lots.
Updated: Oct 19, 2018
Proper estate planning can provide lasting financial protection for you and your loved ones, but mistakes are common if you are not familiar with the principles of estate planning and asset protection law. Inadvertently passing assets to unintended recipients can cause legal nightmares as surviving family members, heirs, and loved ones fight it out in court to figure out which people you intended to inherit what property. An estate planning attorney adds value, often preventing mistakes many times more costly than their fees, by helping their clients avoid improper asset distribution, protect their assets, and better provide for their families' future.
DO YOU HAVE THE RIGHT WHO, WHAT, AND HOW?
Assets passing to unintended beneficiaries or passing to intended beneficiaries in unintended ways can cause all sorts of complications for an estate, its executor, and its beneficiaries.
One unintended consequence of improper estate planning is the overwhelming burden placed on the recipient when he or she alone inherits a large or complex estate. Will the person inheriting your estate know what to do with it? If not, then what you leave to your beneficiary may not be very beneficial at all.
Other consequences of improper estate planning include inheritance by a person suffering from mental or physical conditions or disabilities rendering them unable to properly handle the inherited real property or financial assets. Unfortunately, results like this may endanger the property and assets and even the beneficiary as others around them seek to take advantage of their positions.
Yet another unintended consequence involves a person seeking to treat beneficiaries equally. This can be a problem, because equal is not always fair and may not maximize the impact the estate assets could have on the lives of the beneficiaries. This situation often arises when siblings choose life and career paths that lead to drastically different financial circumstances. For example, leaving $100,000 to a child who is an independently wealthy investment banker likely would have nowhere near the effect on his or her life as it would on the life of a child who chose to be a teacher to students with special needs. Equal is not always best, but a knowledgeable estate planning attorney can help plan for this sort of situation by establishing appropriate trusts such as those that allow the trustee to provide assets to trust beneficiaries according to their needs and circumstances.
THE RIGHT THINGS TO THE RIGHT PEOPLE
As discussed in the previous section, the improper disposition of assets can result from failure to consider the actual needs of beneficiaries. Minor children, adults with special needs, and beneficiaries with low incomes should be considered when deciding how to distribute assets from an estate. Trustees can help by making important decisions to ensure that the benefits of assets in trust are provided to beneficiaries according to their needs and circumstances. Restrictions, timelines, and other provisions can be used in your estate plan to ensure that the specific needs and limitations of beneficiaries are considered. A caring estate planning attorney can help you determine which asset distribution strategies will best ensure the financial security of your family and loved ones.
AVOID COMMON ESTATE PLANNING MISTAKES
Another mistake often made by do-it-yourself estate planners involves choosing the wrong people to execute their wills.
Choosing the right executor is essential to all aspects of your estate plan. Choosing the wrong person to serve as your executor can impact how your assets are distributed and how much time and money may be wasted in the process.
Executors should be knowledgeable of financial matters and able to serve without any conflict of interest. The person you choose as your executor should thoroughly understand your goals and preferences in planning for the handling of your estate.
Errors related to wills and other estate planning documents are often sources of estate planning issues. For example, wills need to be updated to reflect changes in assets, the needs of family members, and changing family structures. Failing to update your will could result in costly errors when it comes to asset distribution.
Finally, you should have the right records in place when planning for your estate. You should ensure that your executor will be able to access or obtain needed information regarding your checking and savings accounts, retirement accounts, insurance policies, tax returns, and safe deposit boxes. Making these documents accessible to your heirs and executor will help ensure that your assets are distributed according to your wishes.
The improper disposition of assets is one of the biggest issues that a person can face when planning for the future or inheriting from the estate of a loved one. Understanding the needs of your beneficiaries and working with a knowledgeable and caring estate planning attorney to prevent the issues discussed here will help protect your family’s financial security and ensure that your intentions and wishes are honored.