Estate Planning Cincinnati: How Your Estate Plan Can Fail

Estate Planning Cincinnati: How Your Estate Plan Can Fail Posted on – 03/31/2017 by PJK While practicing estate planning law in Cincinnati for the past 24 years I have seen estate plans fail for a variety of reasons.  Most of these plans were very well written, however, they usually suffered from one or more short comings that could have been corrected if only it had been discovered prior to the client’s death or disability.  Below I will cover some of the most common reasons I have seen an estate plan to fail. The Wrong Person Is In Charge:    Sometimes the person you think is the best choice to serve as your executor or power of attorney is not always the case. For example, while you may think your spouse or oldest child should be appointed to handle your affairs, there may be someone else who is more qualified or not as personally invested to objectively handle the duties and demands required of an executor, trustee, or power of attorney. Surprisingly, this may not always be your spouse or children. Outdated Beneficiary Designations: The beneficiary designations on your IRAs, 401(k)s, and life insurance need to be reviewed periodically to ensure they are coordinated with your overall estate plan, will and living trust. Upon your death these assets will be distributed to the beneficiary you have listed and won’t be controlled by the terms of your will or living trust unless it is named as beneficiary. Your Living Trust is Not Funded:  Establishing a living trust is just one step in the planning process, as many people forget to fund their living trust. When you establish a living trust, you need to either title your investments and bank accounts in the name of your living trust, or title them with a Transfer on Death (TOD) designation naming your living trust as the beneficiary upon your death. This will allow these assets to avoid probate and ensures they will be distributed according to the terms of your living trust. Your financial planner or brokerage firm can help you do this.  Additionally, you should have a “pour over” will.  The “pour over” will acts as safety net that will transfer assets that were not transferred to your living trust so that they will be dispersed according to your instructions.   Not Planning For Your Disability:  A well-constructed estate plan should not only plan for death, but should also address disability planning. You should have a General Durable Power of Attorney, which is intended to cover your financial matters in the event you cannot handle them yourself.  The individual you appoint to make financial decisions for you is known as your “attorney-in-fact.”   The Durable Power of Attorney is intended to avoid the necessity of an expensive and time-consuming court proceeding to have a guardian appointed in the event you becomes disabled and can no longer manage your own financial affairs. In addition to making sure you have someone to manage your financial affairs, you need to make certain someone has been designated to make health care and life support decisions for you in event you cannot make them yourself. A Durable Power of Attorney for Health Care allows you to name the individual you trust to make health care decisions on your behalf in the event you are unable to make those decisions.  In your Living Will you will set forth your preferences concerning life prolonging medical treatment.  Avoiding These Mistakes: The best way to avoid these mistakes is to take some time and review your documents, your beneficiary designations and how your assets are titled.  If you still have concerns or questions after performing this review, you should have your plan reviewed by an experienced estate planning attorney.  As a general rule, I recommend that my clients have their estate plans reviewed at least every five years.  Paul Kellogg is an attorney in Cincinnati with the Phillips Law Firm, Inc. Paul’s practice focuses on providing comprehensive estate planning and probate services to families and business owners, as well as serving as outside general counsel to entrepreneurs and businesses where he provides guidance and advice on a wide variety of transactions and disputes.  He can be reached at (513) 985-2500 or via email at [email protected].   Please explore Paul’s other articles on estate planning and business on the Phillips Law Firm Blog page.    The article is for educational and informational purposes only and does not constitute legal advice. Anyone contemplating taking legal action is urged to obtain proper legal advice from an attorney licensed in your particular jurisdiction.   For an initial consultation contact us at (513) 985-2500 or email us at [email protected] or click Chat Now!® to get started immediately.