Wednesday, December 30, 2015

5 Common Mistakes with Old Estate Plans

By:  Susan M. Graham, Certified Elder Law Attorney, Senior Edge Legal, Boise, Idaho

Small mistakes in estate planning can result in unintended transfers, out of date beneficiary designations and other unhappy surprises.

Protect yourself and your family so nothing falls through the cracks.

1. You don’t update your estate plan after a divorce and remarriage. If this happens, your ex-spouse may end up with some of your assets if you die without making changes. What is the solution? Change the beneficiary on life insurance and retirement accounts to the new spouse. Sign new powers of attorney for finances and health decisions, to give the new spouse the right to help you if you are unable to take care of your affairs due to illness.

2. You don’t update your estate plan after the death of a spouse. Once one spouse dies, the surviving spouse needs to look at the planning documents to be certain they still fit. Often after a death, the family dynamics shift in an unanticipated way, with children failing to help, being demanding or just troublesome. At a minimum, check to see the beneficiary designations are still correct, and your financial and health power of attorney agents are still the right people.

3. Your Personal Representative / Trustee dies before you do. Now what? Who will take their place? If you do not have a back up / alternate person named, the Court will ultimately decide who takes over if you are ill or when you die. To stay in control, you must update your papers to nominate a back up to handle your affairs.

4. You bought a new house and forgot to put it in your Trust name. Oops. That means when you die, it will be necessary to go to court to have your name removed from the deed. This added expense could have been avoided, if the deed was retitled in the name of your trust.

5. Your existing plan is structured to avoid death taxes, but the law changed and now you don’t have a taxable estate. To avoid death taxes that existed in the past, you may have limited the surviving spouse’s access to funds after the first death. Death taxes no longer apply to most people. Previously, there was a death tax on estates exceeding $1 million. Now the death tax does not apply until an estate exceeds more than 5 million dollars.

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