Five Overlooked Steps in The Estate Planning Process
Jan. 1, 2015
Most people recognize the value of having a will or living trust to ensure their wishes are carried out regarding the transfer of their legacy to loved ones. A significant minority of people also create a power of attorney for financial decisions and prepare advance directives for health care decisions. Although many people worried about estate planning consider these types of issues, there are important estate planning steps that are routinely overlooked when people do not have the benefit of legal counsel from an experienced estate planning lawyer. Kansas probate lawyer J. Joseph Weber has provided some examples of common overlooked parts of the estate planning process.
Not Transferring Assets into a Trust: Even if you have an artfully crafted trust agreement, this document cannot create a functioning trust unless the trust is funded. Funding a trust refers to transferring assets into the trust. If your family home is to be transferred into the trust, for example, title on the property needs to be transferred into the name of the trust. The process of funding a trust usually involves having a financial institution set up a trust with ownership documents included in the trust. Many families suffer financial hardships when a family breadwinner dies without funding a living trust. If an individual dies without a will and fails to fund a trust, the property will pass to the decedent’s heirs based on Kansas intestacy law, frustrating the objective and intentions of the trust creator.
Failing to Periodically Review an Estate Plan: A common misconception about estate planning involves the notion that the creation of an estate plan is something other than a lifetime process. Because a person’s financial situation, assets, debts, liability risks and family connections change, estate planning is an ongoing process. Significant financial and life events like the birth of a child, divorce, remarriage, adoption and retirement can dramatically impact an existing estate plan, so you should have your estate plan periodically reviewed by an experienced Wichita estate planning lawyer. If you have a child, for example, you might want to revise your will to designate your choice of guardian for your child.
Lack of Coordination of Non-Probate Assets with Estate Planning Documents: Many assets like life insurance proceeds, individual retirement accounts (IRAs) and pension assets are passed through a beneficiary designation, so a living trust is not necessary for these types of assets to be transferred outside of probate. Some bank accounts also provide for a “Transfer-on-Death” (TOD) or “Pay-on-Death” (POD) beneficiary, which means that assets are not subject to probate. However, people need to review their beneficiary designations to make sure they are consistent with other estate planning documents like a living trust. If the primary beneficiary pre-deceases the account holder, failure to coordinate with your estate plan can mean the assets become subject to the probate process if you have not designated an alternate beneficiary for the account or insurance policy.
Making Estate Planning Documents Available: If the person who serves as your trustee or estate administrator must track down your assets without a road map or other assistance, the process of inventorying your estate can be slow and costly. You might want to keep a current inventory of your assets and their value along with important ownership documents like property deeds, stock certificates, retirement account statements and similar important documents in a safe deposit box. If you make the person who will handle your estate aware of the safe deposit box and provide a key, this can make the process of distributing your assets to your beneficiaries more efficient.
If you have questions about estate planning issues, we welcome the opportunity to talk to you about an estate plan suited to your needs and goals. We invite you to call us or submit an inquiry form through this website to schedule your initial consultation.