People sometimes make estate planning mistakes that yield negative consequences. If you are aware of the potholes that are out there, you can avoid them. We will shed some instructive light in this post.
DIY Estate Planning
Numerous websites sell do-it-yourself legal documents, including wills and trusts. They want you to believe that anyone can plan their own estate using these boilerplate notions.
“Simple solutions” sound great on the surface. However, experience tells you that they are usually ineffective at best. Yet, these sites exist, so many people buy into their sales pitches.
You may take our thoughts on the subject with a grain of salt because we execute these documents for clients. A cynic would say that a law firm would always advise against DIY legal documents.
Actually, you don’t have to take our word for it. Consumer Reports conducted an objective study some years ago. Staff members obtained last will templates from three of the most popular legal document websites, and they created wills using common hypothetical circumstances.
They enlisted three prominent legal professors to examine the documents and provide feedback. The educators stated that they found various flaws in the documents. They said they could see how unintended negative consequences could come about when these tools are used by inexperienced people.
After evaluating the feedback, Consumer Reports advised clients to stay away from DIY estate planning notions unless the situation is extremely simple and straightforward.
False Assumptions About Trusts
Far too many people make false assumptions about trusts. They assume that trusts are very complicated documents that are expensive to create and are only useful for multimillionaires.
In reality, different types of trusts can satisfy various respective aims, and they don’t have to be especially complicated. For example, a revocable living trust can be the ideal estate plan centerpiece for a wide range of people who are not extremely wealthy.
If you have a living trust, you would act as the trustee, and you would retain the right of revocation. You would have complete control of all the assets in the trust, and you would be able to change the terms as you see fit at any time.
In the trust declaration, you would name a trustee to succeed you after your passing, and your heirs would be the beneficiaries. When the time comes, the assets will be distributed per your wishes outside of probate.
This is a costly and time-consuming process that would enter the picture if you use a will to state your final wishes. The avoidance of probate is one major positive, but there are others.
A living trust is just one of the options that exist. You should explore the possibilities in light of your unique personal situation before you make any choices.
Failure to Address Long-Term Care Costs
A lot of people who think about estate planning do not consider the fact that nursing home costs can potentially consume all or most of your legacy. Medicare does not pay for long-term care, and nursing facilities are extremely expensive.
Medicaid will cover the custodial care that nursing homes provide, but you can’t qualify if you have significant assets in your own name.
You could convey assets into an income-producing Medicaid trust to develop the right financial profile, and we can show you how it’s done.
We Are Here to Help!
Action is required if you are currently going through life without a professionally prepared estate plan. You can schedule a consultation appointment at our Oklahoma City estate planning office by calling us at 405-843-6100.
Our Tulsa location can be reached at 918-615-2700, and you can fill out our contact form if you would prefer to send us a message.
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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