1. Thinking your will controls how all your assets pass upon your death? Contrary to what many people think, many assets pass outside of wills. Joint tenancy assets pass to the surviving joint tenant regardless of what your will says. Also, if you have named a beneficiary on your life insurance policies or retirement policies and that person survives you, those assets will pass to that named beneficiary.
For example, George named his eldest daughter as the beneficiary on his life insurance. His will left his estate equally to his two daughters. The older daughter will end up receiving the life insurance proceeds plus half of the remainder of the estate.
Another example, Fred purchased his home in joint tenancy with his sister when he was single. Fred later got married and created a will that left everything to his wife. However, Fred never changed title to the property that was held in joint tenancy with his sister. As a result, the bulk of his estate passed to his sister and not his wife.
Many of these problems can be avoided by creating a living trust centered estate plan. Most assets can either be titled in the name of a living trust or the living trust can be named as the beneficiary. As a result, a living trust can control how your assets will be distributed.
2. Planning your estate around specific assets. Unless it is imperative that a specific asset goes to a specific person, it is not recommended to plan around specific assets.
Example: John had three children that he intended on treating equally. He titled his home in joint tenancy with his older daughter, added his younger daughter as a signer on his savings account and named his son as the beneficiary of his life insurance policy. When he made these arrangements, all three assets were of roughly equal value. Over the years, he sold his home, put the proceeds in his savings account and let his life insurance policy lapse. When he passed away, the savings account passed to his younger daughter. He unintentionally ended up disinheriting his other two children.
This same problem can occur when leaving specific assets to specific individuals under a will. If you no longer own that asset, the bequest usually lapses. By creating a living trust centered estate plan, you can divide your estate equally amongst your children and give each child the right to take a specific asset as part of his/her share. This way, you avoid unintentionally disinheriting some of your children.
Working with a counseling-oriented estate planning attorney can help you avoid these common pitfalls and make sure your assets are divided according to your wishes.
For more information please contact Lisa S. Golshani, Attorney at Law, 27240 Turnberry Lane, Suite 200 In Valencia, at 661-362-0770.