The 5 Reasons Estate Planning Fails
My job as a California Estate Planning attorney is to help you plan for your incapacity and your death which does force you to face your own mortality. In my opinion, it is not morbid to think clearly about death. This is my 21st year acting as a zealous advocate for legacy planning. You will want to review the following items that I have identified as the “The 5 Reasons Estate Planning Fails.”
#1 Not In Writing
The main reason estate planning fails is because you failed to put your wishes in writing and you failed to sign the documents needed for a complete estate plan which include the Trust; a Last Will & Testament – Pourover Will; a Healthcare Directive, and a Power of Attorney. You are not alone; you can hire a professional like me to assist you in this process. I help my clients identify their circumstances and objectives and I recommend and prepare the legal documents that they need to avoid a CA conservatorship case upon their incapacity and a CA probate case upon their death.
#2 In Writing But Not Correct
The 2nd reason estate planning fails is because you put your estate plan in writing, but you failed to have your documents reviewed. It is important to check first to make sure that all documents have been properly executed and notarized and that there are no missing pages. It is important to determine if any changes need to be made to the original documents. It is important to determine if any updates need to be made due to changes in circumstances. Common examples of changes in circumstances include legal name changes and changes to marital status.
#3 In Writing But Not Updated
The 3rd reason estate planning fails is because you put your estate plan in writing, but you failed to have your documents updated. It is important to determine if any updates need to be made due to changes in circumstances. Common examples include a change in property ownership because of purchase and/or sale and/or receipt of an inheritance.
#4 In Writing But Beneficiaries Not Updated
The 4th reason estate planning fails is because you put your estate plan in writing, but you failed to review and update your beneficiaries of your will or trust.
#5 In Writing But Not The Right Documents
The 5th reason estate planning fails is because you put your estate plan in writing, but you failed to sign the correct documents. The most frequently asked legacy question is people asking the difference between a Will and Trust.
Both the Will and Trust report family declarations which include your marital status and whether or not you have biological or adopted children or stepchildren. I always recommend that clients include the full legal name of their children and their date of birth. The date of birth is not required but it is helpful in determining immediately if the children have reached the age of majority and are over the age of 18 years. If any of the children are under the age of 18 years, then the courts will need to appoint a guardian for the minor children. If you have had additional children since the date you signed your Will, I recommend that you update your document even though California law will write in that child’s name.
Both the Will and Trust name a nominee in charge of your estate. It is called a “Executor” under the will and “Trustee” under the Trust. The person in charge of your estate, whether they are an Executor or a Trustee, must complete a number of tasks upon your death including (1) inventory; (2) pay creditors; and (3) distribution.
The Will and Trust are different because the Will is a “Testamentary” document and the Trust is a “Living” document. This means that even if you sign a Will today, it is not effective until you pass, it is a testamentary document. A Will is simple to revoke. You can revoke your Will by signing a new one. In contrast with the Trust, if you sign a Trust today, it is effective immediately, it is a living document and is effective during your lifetime. Most Trusts are revocable during your lifetime and become irrevocable upon your death. The most common example of someone revoking a Trust is someone who is getting a divorce so they must revoke their current Trust which leaves everything to a soon to be ex-spouse.
Another main difference between the Will and the Trust is that for a Trust to be valid, you must transfer money and property into your Trust which is called Trust Funding.
To determine whether you need either option 1) a Will or option 2) a Will and a Trust depends on your own circumstances and objectives. I recommend that all clients who do not own real property or own less than $100,000 should consider a Will. I recommend that all clients who own real property or own $100,000 or more should consider a Trust. I also recommend a trust for clients who have minor or disabled children or are a blended family which means they have his and her children and his and her property.
When you have a Trust, you do need both a Will and a Trust but the Will is called a pourover will. The difference is that it simply leaves everything left in your name only to your Trust. The pourover will is designed to avoid probate because it can capture something you failed to put in the name of the trust.
