No. 1 – Not Having a Will
Everyone should have a Will and, depending upon the circumstances, some should utilize a revocable living trust as their primary estate planning document. Wills do more than dispose of assets. They are also used to designate guardians for minor children (or special needs adults). Without a will, state law controls who receives the assets.
No. 2 – Believing Assets will not go through Probate because there is a Will
Assets which are subject to probate process are those which are in the decedent’s name alone. It makes no difference whether there is or is not a Will.
No. 3 – Not changing the title of assets into the name of a the Revocable Living Trust
Revocable Living Trusts are “marketed” as estate planning devices to avoid probate. However, just having the revocable living trust is not enough. The assets must be transferred into the name of the trust if probate is to be avoided, and the other advantages of the trust are to be achieved.
No. 4 – Assuming you family knows your wishes for Life Support and Funeral Arrangements
Simply telling your family your wishes is not enough. The legal document necessary to address one’s wishes and be assured they will be carried out regarding life sustaining treatments and funeral arrangements is the Illinois Statutory Short Form Power of Attorney for Health Care. (All states have similar statutes; check with your attorney if you reside outside of Illinois.)
No. 5 – Putting your assets in Joint Tenancy with one of your children in order to avoid probate or for the convenience of paying your bills
Placing assets in joint tenancy to avoid probate causes many problems. Under Illinois law, upon the death of a joint tenant, the surviving joint tenant is the sole owner of the asset. There is no legal requirement for the surviving joint tenant to share these assets. In addition, there may be income tax and equalization issues. The Illinois Statutory Short Form Power of Attorney for Property should be used to provide help in asset management in the event of disability or illness.
No. 6 – Not periodically reviewing the beneficiary designations of retirement accounts and life insurance policies
You should periodically review beneficiary designations, especially if there has been a second marriage. Are the named beneficiaries still appropriate based upon the circumstances and tax laws as they now exist?
No. 7 – Waiting until the children are grown to prepare a Will
Many young couples (those without children or those with children under 30) delay preparing a Will. It is probably most important for young couples – with or without children – to have Wills. Without a proper Will, assets for young children may be subject to a court supervised guardianship and be distributed to the children upon reaching age 18. In a common accident where both spouses die, the order of death can sometimes cause an unintended disposition of assets – heirs of one spouse received everything and heirs of the other nothing.
No. 8 – Getting you estate planning advice at a cocktail party
See Your Estate Planning Attorney!