The first mistake to avoid is not having an estate plan that includes a Will or a Trust along with a Durable Power of Attorney for Financial Matters and a Patient Advocate Designation. If you die without a will (die intestate), the State of Michigan decides who will receive your property and who will serve as your personal representative. Having a will or Trust will help to ensure that after you die, your intentions for distribution of your property will be carried out by a person you have chosen. It is also important for parents of children to have a Will so that they can identify a person to be appointed guardian and conservator for their children if both parents die when their children are minors.
In addition, a Durable Power of Attorney and Patient Advocate Designation are important documents that will ensure that financial and medical care decisions will be carried out by a person you trust if you are incapacitated and unable to make decisions.
Often, I find that an individual forgets to update their beneficiaries in their insurance policies or retirement plans. This can also apply to bank and financial accounts that are set up a payable on death (POD) accounts to beneficiaries. Many people assume that these assets are controlled by the Will or Trust but they are not. You must update beneficiary designations to make it consistent with how you want your assets disbursed. Forgetting to review or update your beneficiary designations may result in your assets passing in a manner that you did not intend.
People also forget to update their estate planning documents after major life events such as marriage or remarriage, the birth, death or marriage of a beneficiary, a separation or divorce, or moving to another state. Any time a person has a major change in his or her life, they should review their estate planning documents to see if any updating of the documents is needed. It is also a good idea to make a practice of reviewing your estate documents at the beginning of each year.
Another common mistake is naming a minor as a direct beneficiary of your property. A child under 18 is not permitted to receive property directly from an estate. The time, trouble and expense of a guardianship or conservatorship can be avoided by designating in a Will or Trust a trustee for any minor child who is a beneficiary. The Will or Trust can also specify how property or assets are to be distributed to a minor beneficiary and over what period of time, even after the beneficiary is 18 years old.
I have discussed a few of the major issues I frequently see. The best way to avoid these mistakes along with your family’s stress and cost of dealing with these problems is to it arrange a no obligation consultation with an estate planning attorney.