Estate Planning… Mistakes You Don’t Need to Make
Estate planning can be a complicated and tricky business. Without a legal document detailing your wishes and how and when you want your estate divided and distributed, your assets could end up in the hands of a son or daughter before he/she has a clue about how to manage money wisely, or even a relative you hardly know. One of the most important things you can do to protect both your estate and your loved ones is to consult with an experienced estate planning attorney. They will ask the right questions, listen to your answers, and draft estate planning documents that make sure that your wishes are followed and mistakes are avoided. The last thing you want is your heirs “duking” it out in court after you’re gone.
Here are four, often-made mistakes that are easily avoided:
Failing to maintain or update your estate planning documents: Even with what you may consider a simple estate… maybe just your bank accounts or a house, it’s absolutely crucial that you have and maintain a valid will or living trust. Otherwise, you’ll have no control over who will inherit your possessions, your wishes may not be fulfilled, and it will be up to Virginia intestacy law to decide how to distribute your assets. This could mean that your estate will be split between people who don’t get along and end up fighting over your estate in court, or people you don’t wish to inherit.
Make sure that beneficiaries are kept up to date, especially after a life-changing event like a death or divorce. The beneficiaries of life insurance policies, a 401k, and other retirement accounts will need to be changed. If your first wife is still the beneficiary of your life insurance policy, no matter how long you’ve been divorced, or how long you’ve been married to your current spouse, she will inherit and get to keep the money.
People mistakenly think that once their will or trust is signed, they’re done with it forever, but that’s not the case. You should review your estate planning documents every five to six years to make sure nothing in your life that has any bearing on your estate has changed.
Be careful when naming an executor: Families are complicated and family dynamics during stressful times can cause in-fighting and damage relationships. Feuding siblings are probably the most common cause of litigation over an estate. It’s often best to name an objective, independent representative as executor of the estate, another family member or close friend, instead of one of your children. Even if the estate is to be divided equally between siblings, giving the ultimate decision-making power to one of your children may be a recipe for disaster. An independent representative, whose only allegiance is to your wishes, will settle the estate and potential disputes fairly.
Gifting money to minor children or grandchildren with no rules in place: If you name a minor a beneficiary of your estate with no restrictions, that young person will have total access to his/her inheritance at the age of eighteen. Children, unfamiliar with access to large sums of money or budgeting can blow through an inheritance in a matter of months.
The most prudent thing you can do to prevent a situation like this is to create a revocable living trust that provides for the health, education and well-being of the young heir. It’s a legal document you create that allows you to manage your estate while living, and designate a trusted agent to execute your wishes after your death.
The trustee may be a family member, friend, or even someone unrelated to you, who will use the money responsibly to cover the child’s college tuition and costs, buy him/her a car, and generally help instill proper money management lessons. Once the child reaches a specified age, maybe 25 or 30, he/she can inherit the balance of the estate. Ideally, this will ensure that your wishes for your heir is met and that he/she is set up for a financially secure life for the long-term.
Don’t forget to specify the beneficiaries of important personal items: The death of a loved one often doesn’t bring out the best in relatives, especially when it comes to heirlooms and other valuable or meaningful items owned by the deceased. To keep family members from squabbling over, stealing, or hiding items that they want, talk with your children, grandchildren, and other family members now about which possessions mean the most to them. Then put it in writing. Clearly list exactly what you want to bestow on each heir and where it is kept, and attach this list to your estate planning documents. Remember, it’s easy to challenge a “verbal” agreement in court, but much more difficult to disprove a written one.
The best way to ensure that your wishes for taking care of your loved ones and distributing your property are carried out after your death is to consult with a knowledgeable and experienced estate planning attorney. In Virginia, Melone Law, P.C. is here to help. We offer a full range of estate planning and probate services including wills, trusts, powers of attorney, living wills and advance health care directives, estate tax planning, guardianship and conservatorship, and representation for contested estate matters.
About Melone Law, P.C.
Melone Law, P.C. is a general practice law firm based in Reston and serves the Northern Virginia area. Our practice areas include Family Law, Divorce and Special Needs Children, Traffic Ticket Defense, DUI/DWI Defense, and Trust and Estate Law. Our philosophy is to provide all of our clients with the highest quality legal representation, innovative legal solutions, and unsurpassed dedication to customer service. Through our high standards, we strive to be a trusted resource to our clients.
We know from experience that a successful attorney-client relationship depends on our ability to understand your needs and objectives. For more information about estate planning, contact our office today at 703.995.9900 or visit our website: www.MeloneLawPC.com.