As a recent article in Financial Post points out, there are good and bad things about making mistakes in your estate plan. The upside is that you won’t be around to suffer the consequences involved in your mistakes. The downside is that your family could be dealing with the pain for years after you die. Here are some mistakes every Houston family should avoid in their estate plans:
Leaving everything to someone with private instructions about who should receive your assets. No matter how much may trust someone, you have no guarantee that your wishes will be carried out unless those instructions are set forth in a legally binding documents, such as a will or trust. Additionally, you have no guarantee that the person you trust will survive you. By naming backup executors in your will, you can alleviate this concern and ensure that there will be someone there to carry out your wishes and administer your estate.
Setting up your will and forgetting about it. Financial and family situations change, as do estate planning and tax laws. By keeping your will up to date, you ensure that the most current beneficiaries are listed in your will, and that any specific gifts made do not lapse. For instance, if you make a gift of a piece of real estate to an individual in your Texas will, but you do not own that property when you die, the gifts lapses and the person you named to receive that property may get nothing under your will. Reviewing and updating your will as necessary avoids issues such as this.
Giving most or all of your assets to your children. Sometimes in an effort to avoid a costly guardianship or perceived probate costs that may be incurred after death, people give most or all of their assets to their children, with the understanding that those assets will be used for the parent’s well-being. Aside from putting the parent at the mercy of their children for their own support, this type of transfer can cause potential issues if the parent needs to apply for Medicaid within the relevant “look-back” period for making these gifts, and may result in the parent being ineligible for Medicaid for a period of time.
Trusting a homemade will. Homemade wills are valid if they comply with Texas law regarding what they must contain and the formalities for executing them. Do you know what these requirements are and the effect of not complying with them? If not, you should speak to an estate planning attorney, who can provide you with the advice you need concerning your Houston estate plan. For more information, see this prior post about do-it-yourself estate planning.
Reference: Financial Post (October 29, 2014) “‘Your grandfather’s dead. It’s my money now’: Five estate-planning mistakes to avoid”