Three Estate Planning Moves Smart Seniors Avoid

You already know that naming your children on your deed is probably not good tax planning for the next generation. But what other, less obvious deed mistakes do smart seniors avoid? Here are three to consider.

1.   Signing the Documents and Considering Them Done

Take your estate planning seriously by considering it a work in progress, subject to revision. Because life happens. Laws change. Your health changes. Your loved ones have life changes too. What might have helped your heirs most five years ago might not be best now.

And sometimes, a financial institution won’t accept an outdated document.

If you move to another state, or your personal representative faces a serious illness or other setback, you might need to name someone else to act for you. Do name a backup person who can serve in case your original choice cannot.

If you and your life partner separate, out-of-date paperwork can turn into legal problems after you’re gone.

So, every few years, preferably never more than five, check your estate planning documents and update them as needed. Go through your financial accounts and be sure your beneficiary designations align with what you state in your will. If you get (re)married, update your will. Both partners need their own wills, and the wills can match “mirror” each other’s.

2.   Appointing a Procrastinator (or Someone Whose Life Is Just Too Busy to Wrap Up Your Affairs)

When you select a personal representative, you convey the idea that the person you pick is loved, trusted, or both. Or maybe you pick someone because they seem right from a traditional standpoint.

But you’re putting your assets in the best position by selecting someone who can competently follow your instructions and wisely manage your property. Use special care when choosing a successor trustee if you create a trust to hold a home for your beneficiaries. Holding onto an empty home can become an invitation to fraudsters.

When choosing personal representatives to wrap up your affairs, ask:

• Who understands the role of protecting and maximizing your assets and repaying creditors?

• Who has a strong sense of responsibility and ethics?

• Who can handle interactions and challenges with grace?

• Who lives in the area and can allocate the time to carry out the tasks at hand?

If your personal representative falls short, an interested person may petition the local probate court for removal and replacement. Often, this means putting a professional trust or banking official in charge of wrapping up your affairs.

3.   Forgetting to Clue In the Family and Friends

Your loved ones need to know the location of your instructions and your account information. It’s important to anticipate the time when you are unable to access these papers and passwords yourself.

And now for the substance of those papers. Is everyone on board with your asset distribution plans? You might have a very good and fair reason, when you write or rewrite instructions for particular assets, to leave certain heirs out, and put certain heirs in. Maybe, for example, it makes sense to pass your deed to one of your heirs, and other assets to others. But be sure everyone who’s affected “gets the memo” now. When someone is surprised by a last will, they might feel left out or shortchanged. This leads some heirs to challenge the plans of the deceased.

Blended family? Be sure to name stepchildren in your will so they are taken care of. If you want them to be beneficiaries of your assets, they need to be specified as such.

On a related note: Read your will and other estate plans carefully, and think them through, before you sign them. Be sure you understand the way your instructions will work in practice—and that your heirs do, too.

You’re busy. Conversations about death are difficult. But probate court is not the right place for surprises.

Speaking of Smart… Involve a Pro

Have you met with an attorney and tax specialist lately? A lawyer can guide you through a personalized comparison of the various legal instruments that may fit your present situation. A lawyer can walk you through powers of attorney and check documents to be sure they’re ready to be followed when needed. Consult your tax adviser as to how to potentially ease the tax burden of a surviving partner and any other heirs.

This article provides general information—not legal or financial advice. Bring questions to a local estate planning attorney for guidance in your own situation, in light of applicable federal, state, and local laws.