Slutzky Law Firm Blog
March 27, 2015
The Most Common Estate Planning Mistakes
Over the years, as you can image, I have had many conversations with individuals regarding their estate planning concerns. Most of the time, they are aware of their own mortality, but for one reason or another, choose not to take action to protect themselves, their businesses, and their loved ones.
Sometimes, they simply procrastinate, knowing that it is something they “really need to do,” and that they will “get around to it eventually.” Or they become creative in their approach, such as putting everything in joint tenancy with a relative who will “know what needs to be done,” often with the goal of saving what they perceive to be the “high” cost of attorney’s fees in preparing their estate planning documents.
Actually, the preparation of the estate-planning documents is just one of components that constitute the entire estate-planning process, and the entire process is usually significantly less expensive in comparison to the cost that may be incurred by their loved ones, due to unanticipated circumstances that can result in probate, guardianships, and many other unexpected consequences caused by their “creative” alternative to a formal Will.
I have found that, in most cases, a husband and wife simply want to leave everything to each other, and then to the kids. What could be easier, right?
Well, what if Husband dies, leaving everything to Wife, Wife gets remarried and then dies. Second husband may inherit everything, and the children get nothing!
Or what happens if they are both killed in an automobile collision. Without the appropriate documents, there may be two probate estates instead of just one. And who will be appointed to be guardian for their children? Who will have the legal authority to run the family business?
During the client interviews, we explore what can potentially go wrong with their basic assumptions and goals, and try to protect them and their loved ones from those unexpected circumstances and unanticipated consequences. Protection from the many “what if” scenarios is an integral part of the estate planning process.
Over the years, I have compiled a list of the most common estate planning mistakes, which I will share with the readers of this blog over the next couple months. I hope you will find them helpful to help you in your own life circumstances. Please feel free to share them with your friends and family.
Estate Planning Mistake Number 1 – Dying Intestate
If you die without a Will or some other form of estate-planning tools, the state in which you reside will basically “write” a Will for you, according to your state’s intestacy statutes. This may result in your estate being distributed in a manner other than what you may have intended or desired. For example, if you are in a second marriage with children of a prior marriage, your second wife may inherit everything, when you may have wanted to leave a bequest to your children.
Of course, the state has no interest in avoiding or reducing taxes, minimizing estate administration costs, expediting the transfer of assets, maintaining the privacy of what you own from public eyes, or protecting your family and legacy.
The supervision of your estate and the distribution of your assets will just be turned over to the Probate Court. While he probate process can be beneficial in certain circumstances, often it is needlessly time consuming, frustrating and expensive.
Your probate file may be open to the public, meaning creditors, predators or anyone else may be able to access information about your estate.
By the way, a common misconception is that having a Last Will & Testament will avoid probate. It does not! There are other methods of avoiding probate which will be discussed in future blogs.
However, a Will enables you to specify whom you want to serve as your personal representative, the person who is charged with the task of collecting your assets, paying your bills, and distributing your estate to whomever you want. You, not the state, chooses.
You are also able to name whom you want to serve as Guardians for your minor children, and can even create a testamentary trust inside the Will to control your assets for their benefit, after your death.
For the vast majority of people, the benefits of having a Will or other estate planning tools significantly outweighs the cost of going through the estate-planning process.
While not related to the above discussion of probate and intestacy, other important documents often created by your attorney along with your Last Will & Testament are other documents meant to protect you while you are still alive. So if you suffer a stroke, disability, dementia, etc. and are unable to manage your own affairs, a durable power of attorney can authorize a representative of your choosing to handle your financial affairs for you. A health care surrogate can allow your chosen representative to make important medical decisions on your behalf if you are unable to do so. A living will can avoid the Terri Shivo situation, and authorize your representative to make the decision on your behalf to “pull the plug” if you are brain dead. And a Pre-Need Guardian Designation can indicate to the court whom you would prefer to serve as guardian on your behalf to take care of you and your assets. These documents are often included in the cost of preparation of your Last Will & Testament.
Additional common estate planning mistakes will be discussed in future blog posts.
Jerrold E. Slutzky, J.D., CFP® is a Florida-licensed attorney at law with offices in Safety Harbor, Florida and Land O’ Lakes, Florida, serving Pasco, Pinellas, and Hillsborough Counties. His practice focuses primarily on Estate Planning Services (wills, trusts, powers of attorney, health care directives, living wills, asset protection, etc.), Probate, and Business Law Services to small business owners (buy/sell agreements, start-ups, choice & formation of business entity, business succession planning, drafting/negotiating/review of documents, confidentiality agreements, corporations, LLCs, partnerships, etc.) and General Legal Counsel & Advice.
Jerry has two locations: 853 Main Street, Suite A, Safety Harbor, Florida 34695 (Pinellas County) and 20719 Sterlington Drive, Suite 103, Land O’ Lakes, FL 34638 (Pasco County). You can call him at (813) 909-1515, or email him at JSlutzky@SlutzkyLawFirm.com. His website is www.SlutzkyLawFirm.com.