There are some common estate planning mistakes that can yield negative consequences for survivors. We are going to look at three of them here.
Assuming the State Will Take Care of Everything
Some people do not prioritize estate planning because they assume that the state will step in to make sure the assets go to their loved ones. The probate court does provide supervision during intestacy cases, so part of the assumption is correct. However, as for the idea that the assets will automatically fall into the right hands, this is hopeful thinking. It all depends on your intentions and the intestate succession laws in your state.
As an example, if you pass away without a plan in Oklahoma, and you have no children and a spouse and parent still living, your spouse would not inherit all of your property. Your parents would inherit a portion, and your spouse would receive the rest. As a second example, if you pass away with a spouse and joint children, your surviving spouse would inherit half of your intestate property, and your children would inherit the remainder.
These outcomes may or may not be what you desire. In addition to the fact that the inheritance distributions would be out of your control, the intestate estate administration process is time-consuming, and it can be contentious.
DIY Estate Planning
There are websites that sell boilerplate legal documents. These websites claim it is easy for anyone to plan their own estate using a standard will or trust downloaded from the internet.
A number of years ago, Consumer Reports conducted an interesting study. Staffers created simple wills using downloads that they obtained from three of the leading purveyors of DIY legal documents. They engaged a trio of legal scholars to take a look at the wills. The attorneys found flaws, and they stated that utilization of these downloads could yield unintended negative consequences. Ultimately, Consumer Reports advised against DIY estate planning.
Failure to Prepare for Long-Term Care Costs
When you are making projections with regard to the legacy you will leave behind, have you considered nursing home costs? Many have not, and many believe they won’t need nursing home care, and that Medicaid will pay for it if they do.
In reality, most senior citizens will need some type of living assistance, and 35 percent of elders will reside in nursing homes. Medicare does not pay for the custodial care that these facilities provide, and nursing homes are extremely expensive. In addition, if you are married, your family could be saddled with two sets of nursing home bills. Medicaid may ultimately cover expenses, but not until assets have been depleted sufficiently to qualify for the Medicaid benefits. Depending on the extent of your resources, your legacy can wind up in the coffers of these facilities or the government.
Long-term care insurance, or an irrevocable Medicaid trust are solutions to this problem, but advance planning is necessary.
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