Estate Planning Pitfalls - 3 Mistakes That Could Make Your Estate Plan Worthless
Including a Trust in your estate plan is a strategic decision that offers several advantages, such as avoiding probate, maintaining privacy, and ensuring assets are distributed according to your wishes while potentially providing lifetime asset protection for your beneficiaries. However, it’s crucial to understand that merely setting up a Trust is not sufficient. Here are important steps to ensure your Trust functions effectively:
Funding Your Trust Properly
Funding your Trust involves transferring ownership of assets from your name to the Trust’s name. This includes bank accounts, investments, real estate, and other valuable possessions. Proper funding ensures that your assets are managed as per your Trust’s terms, facilitating their distribution according to your wishes in the event of your death or incapacity.
Failure to fund your Trust properly means your Trust remains empty, and your assets may not be protected or distributed as intended. Even if your assets are able to get into your Trust after your death, your family may still need to go through costly court processes to access them.
Updating Account Beneficiaries
Many people mistakenly believe that a Will or Trust alone dictates how their financial accounts should be distributed. However, beneficiary designations on accounts override instructions in these legal documents. It’s crucial to review and update beneficiary designations on accounts like bank accounts, retirement plans, and life insurance policies to ensure they align with your Trust’s intentions.
Your Home and Your Trust
Your home is often your most valuable asset. If it’s not properly deeded into your Trust, it may not be included under your Trust’s terms in case of incapacity or death. Without this crucial step, your home could end up in probate court, which can be costly and time-consuming for your loved ones.
Regular Review of Your Estate Plan
Estate planning isn’t a one-time task. It’s essential to review your estate plan and financial accounts at least every three years. This ensures that all assets are correctly titled or designated to your Trust. Simple oversights, like opening a new account and forgetting to include your Trust, can be caught and corrected during these reviews.
Comprehensive Planning with Legal Guidance
Creating legal documents like a Trust is just the beginning. Coordinating all aspects of your estate plan, including asset titling and beneficiary designations, requires expertise to ensure everything works together seamlessly. Working with an experienced estate planning attorney ensures that your plan reflects your wishes and effectively protects your assets and loved ones.
If you’re unsure about how to coordinate your estate planning effectively or need guidance on updating your existing plan, don’t hesitate to seek professional advice. A thorough review and thoughtful coordination can safeguard your legacy and provide peace of mind for you and your family.
If you want to know more about my process for funding your Trust and making sure nothing is ever left out of your plan, click the link below to schedule a free 15-minute discovery call. I can’t wait to hear from you.
This article is a service of Zarda Law, S.C. We do not just draft documents; we ensure you make informed decisions about life and death, for yourself and the people you love. That's why we offer a Legacy Planning Session, during which you will get financially organized and make all the best choices for the people you love. You can begin by scheduling a Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.
