Let’s face it, most of us do not want to think about ourselves or our loved ones growing old and facing death. It’s not surprising that this aversion can lead to estate planning mistakes which can cost your family in time, money, and stress. Unfortunately, we often see how these estate planning mistakes can have a devastating effect on families. Below are some of the most common estate planning mistakes that we encounter:
If your estate plan consists only of a will, your assets will most likely have to go through probate upon your passing. This is the court process of transferring your assets to the beneficiaries you name in your will. Having to go through probate usually means that fees will need to be paid to the court from your estate and your heirs will need to devote their time to administer your estate. While a will is the most common estate planning tool, it is not the only tool you should have in your estate plan.
Estate Planning Mistake #2: Relying on the State of Michigan’s estate plan.
If you do not set up an estate plan before you pass away, your property will be distributed according to Michigan law, which is called intestate succession. Without the proper planning, the law may require the probate judge to give your property to someone other than whom you would have chosen.
It is not uncommon for people to add their children to their bank account in order to give them access to the money in case of an emergency. In doing this, most people do not realize that they are actually giving ownership of their assets to their child. This means that if the child goes through a divorce, bankruptcy, or has creditor issues, your assets are at risk of being taken because of the joint ownership. There are many other options available, which come with much less risk, than simply owning property in joint tenancy. You can find more information regarding the risks of joint tenancy by visiting our website at https://www.ssrlawoffice.com/9dangers-of-owning-real-property-in-joint-tenancy/.
Estate Planning Mistake #4: Relying on a right of survivorship designation to transfer assets or property.
By owning assets or property as joint tenants with rights of survivorship, the assets or property will transfer to the surviving owner upon the first owner’s passing; however, this is just delaying probate proceedings because the assets or property will still have to go through probate on the death of the second person. This is especially troublesome for families with second marriages. When one spouse passes away, the assets or property will be transferred to the surviving spouse. Upon the second spouse’s passing, the assets or property will then be passed down to the heirs of the second spouse and not to the heirs of the first spouse who passed away. With the proper planning, an estate plan can insure that the heirs of both spouses receive their fair share of your estate.
If you become incapacitated without having first signed a Durable Power of Attorney or Designation of Patient Advocate, your family will have to seek guardianship and conservatorship through the probate court in order to manage your financial affairs and medical decisions. These court-supervised proceedings for addressing your physical or mental incapacity are public, costly, and time-consuming. With the proper planning, you can avoid the need for conservatorship and guardianship altogether.
Estate Planning Mistake #6: Relying on the small estate exemption as your way of avoiding probate.
Most people assume their estates are worth far less than they actually are. The small estate exemption that avoids a full probate proceeding is permitted only for estates that do not include real estate and are valued less than $22,000. Most estates do not meet these criteria, which means your heirs will have to open a full probate to gain access to your assets after you pass away.
Estate Planning Mistake #7: Relying on online forms or a do-it-yourself kit for your will or living trust.
When it comes to estate planning, one size does not fit all because no two people or families are alike. Do you know of anyone who has exactly the same assets and property you have? Do you know of anyone who wants their assets and property to go to the same people as you? Your estate plan should be custom drafted to meet your specific needs. If you use an online form or a do-it-yourself kit, you are increasing the risk for potential problems. The only estate plan you can depend on is one that is custom prepared by a qualified attorney.
While most attorneys generally know about the estate planning process, you should choose an attorney that wants to help you and your family avoid probate. In fact, some attorneys earn their livings from probate estates, so certain attorneys won’t tell you how to plan ahead to avoid probate. Choosing an attorney that specializes in estate planning will ensure that your estate plan is done properly for you and your family.
Estate planning is a critical part of everyone’s life. To have an effective estate plan, it is important that you not fall into the trap of thinking that your estate is so “simple” that you do not need to plan ahead. The experienced estate planning attorneys at SSR Law Office can help you establish a complete and customized estate plan that will avoid these common mistakes and ensure that your assets and property will be passed to your loved ones without the aggravation of probate.