Estate Planning Pitfalls
Posted on Feb. 13, 2012
- No Will. If a person dies without a will, trust or beneficiary designations, that person’s assets are distributed under the state intestacy laws. In Utah, assets are distributed to the person’s spouse and descendents (children and grandchildren), parents, then siblings. The court appoints a personal representative and oversees the distribution of assets.
- Failure to Appoint Guardian for Minor Children. In Utah, you may appoint guardians for your minor children through a will. If you and the other parent pass away before your children reach the age of 18 without naming a guardian in your will, a court process is required to appoint a guardian. It is sometimes a difficult decision to choose a guardian, but most parents would rather make that decision themselves rather than having a court decide.
- Estate Plan is not Coordinated. You should make sure that your estate planning documents are all coordinated. For example, if your will leaves your assets to your 3 children, but one child is listed as the beneficiary of your life insurance policy, the beneficiary designation trumps the will and the one child inherits the proceeds of the life insurance policy. The same is true if one child is a joint tenant with rights of survivorship on your house or one child is the beneficiary of a retirement plan.
- Failure to Fund Trust. If you create an estate planning trust, such as a revocable living trust, but fail to transfer your assets into the trust, the trust has no effect.
- Prepare Estate Plan Before it is Too Late. An estate plan should be prepared while you have the mental and physical capacity to make decisions, to understand your estate plan and to properly sign. If you or a parent is incapacitated, for example due to dementia, the estate plan may be subject to challenge.
Please contact me to schedule a presentation on estate planning to your group.