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 Common Pitfalls of Estate PlanningBare-Bones Living Trusts Although most living trusts appear to be better than a will, they are about the same if not fully funded, because they do not avoid probate. Most living trusts do not contain instructions for loved ones--they are sterile legal forms. They only accomplish limited objectives. Jointly-Owned Property Your joint tenancy property can pass to unintended heirs. Joint tenancy does not avoid probate. It only delays it. There may be unintended gift and estate taxes if joint tenancy is used between non-spouses or with children. Joint tenancy makes no provisions for estate tax planning. Joint tenancy doesn't allow you to give your property to whom you want, the way you want, and when you want. Planning With a Beneficiary Designation Designating your beneficiaries on a standard business form "beneficiary designation" often means losing control of a major part of your estate. It does not enable you to leave instructions or provide guidance to your loved ones. Often times the wrong beneficiary is named in the beneficiary designation. A beneficiary designation won't protect your spouse and children from creditors or unscrupulous people. Equal distributions from a beneficiary designation can cause unequal results that won't meet your family's special needs. Beneficiary designations make no provisions for federal tax planning. Wills Wills guarantee probate--which can generate executor and attorney fees and may cause time delay before your loved ones can receive their inheritance. Wills are fully public. They are open to inspection by anyone who wants to know about your will and affairs. Wills offer no planning or direction for you or your family in the event of disability. Wills are easily challenged by unhappy relatives. Wills most often don't control their makers' life insurance proceeds, retirement benefits, or jointly-owned property. Wills are often bare-bones form documents written in hard-to-understand language. They don't capture the hopes, fears, dreams, values and ambitions of their makers. Wills may not be effective when their makers move to or own property in another state. |
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| ©2008, Dallas W. Jolley, Attorney & Counselor at Law. Send questions or comments to info@jolleylaw.com. | |||||
