We get it, estate planning is not the most popular item on your “to-do” list. And for many who get around to doing it, their plan becomes a forgotten relic left to collect dust on the bookcase. Whether you’ve spent thousands for a comprehensive plan or utilized a do-it-yourself option that you found online, it’s critical to update your plan to ensure it works as intended at death or incapacity.
An outdated estate plan is as useful as a life jacket in a sandbox. In fact, case studies have shown that estate plans that are not updated every 3-4 years may result in several problems for those left to handle your final affairs, including probate court. It can be a costly and time-consuming mess. In this article, we’ll discuss a few of the most common issues encountered when plans are simply forgotten.
People change, things change. It’s heart-wrenching when we receive a call from someone grieving a loss and who is frustrated because of a failed estate plan. An old trust with no updates is often the cause.
To our dismay, we often review trusts only to discover that family deaths, births, divorce, and significant asset changes have not been accounted for in someone’s plan. Unfortunately, at death or incapacity, it’s too late to make these changes. At that point, the family must petition the court and endure the very process that the plan was created to avoid. Money invested has become money wasted.
An effective plan is one that evolves as your life evolves. This is made possible by maintaining a healthy relationship with your estate planning attorney. We advise our clients to conduct annual reviews and consider major life events that could potentially impact their estate plan. Additionally, keeping a spreadsheet or inventory of assets is a great way to stay on top of what you own and ensure your family shares in that knowledge. A failure to do so could result in assets lost to California’s department of unclaimed property.
At Legacy One Law Firm, we’ve created processes and systems which encourage the type of communication that allows our clients to be forward-thinking and effective planners. This means every few years their estate plans are reviewed (for free) and updated where needed. Changes in life, laws, and property over time make it imperative to provide our clients with this level of service.
Consider periodic updates to your estate plan to ensure it works at intended.
We often find that once a trust has been established, the additional step of retitling the assets with the name of the trust is overlooked or forgotten. Keep in mind that there are several types of property that are inside of your trust and they must bear its name to reap the benefits of it. Think of your trust as a container or vessel designed to hold all your possessions with special instructions for distributing and managing everything inside.
However, if anything is left outside the container—for instance your home, bank accounts, business, or investments— those things are at risk or outside the zone of benefits provided the container.
In the world of estate planning, the retitling or transferring of assets into the trust is known as “Funding” the trust. This service is not included in most plans and must be requested of your lawyer or performed by you after the signing of your documents. Unfortunately, there are many lawyers that will draft a will or trust at seemingly low prices, yet fail to properly advise on this critical step in the process.
At Legacy One, we’ll guide you throughout the entire estate planning process including the funding stage. We can provide this service or offer coaching for the DYI planners willing to take the time to see it through. You decide!
Unfortunately, no one can guarantee that your family won’t end up in court, even with an updated plan. Nonetheless, with an outdated plan the chances that your family ends up in probate court are dramatically increased.
With that said, we cannot overstate the importance of an ongoing relationship with your estate planning lawyer. In fact, it’s wise to include your immediate family in that relationship because they will often call on that lawyer to help administer the plan when the time comes.
Our relationship-based planning reaches beyond the scope of drafting legal documents, which means that your plan is not left vulnerable to the winds of change.
Contact us today to have your current estate plan reviewed or to create a new plan to secure your legacy.
