The mistake is actually failing to address healthcare decisions before the need arises. For example, a lady came into my office and said, “My neighbor is in the hospital unconscious. We have lived next door to each other for 30 years and we are best friends. I went to the hospital and the doctors won’t tell me what is happening with her. Her ‘no-good’ son who she hasn’t seen in over 15 years is now in town, and that is who the doctors are allowing to make decisions for her. Is there a way for us to go to court and get me the right to make her medical decisions for her, because I know that is what she would want?” Unfortunately, my answer had to be that there was nothing we could do now, because her neighbor didn’t have the proper documents in place.
#2 No Plan to Control Financial & Property Matters During Incapacity
Incapacity is harder to talk about than death, because we all know that we are going to die some day, but we won’t all become incapacitated. I usually explain it as being similar to when we buy house insurance in case the house burns down. When we buy it, we don’t imagine the house burning down and how we would feel about losing everything. When we plan for incapacity, it is just in case it happens and so we and our families will be protected if something happens.
#3 No Wealth Transfer Strategy
Your wealth transfer strategy needs to be tailored to your assets and your particular family situation. One of the first things I ask clients when they come in to meet with me is to tell me about your children and grandchildren. I can then customize the estate plan is then customized to your unique family situation.
#4 Failure to Understand & Plan for Medicaid and Veteran’s Benefits
A married veteran can qualify for up to $2054 in aid and attendance benefits. The veteran must have served at least 90 days and at least 1 day needs to be during a defined period of war. The veteran must have a medical need. The veteran must need help with activities of daily living (bathing, dressing, toileting, etc.)
Medicaid is a way to get the federal government to pay for skilled nursing. There are asset and income requirements. With a married couple, there are ways to protect almost all the assets, and with a single person, we can protect about 1/2 of the assets.
#5 Thinking Children–Minor and Adult–Don’t Need Inheritance Protection
We can design a trust that protects even responsible beneficiaries from losing what you leave them to creditors, lawsuits and divorce.
#6 Failing to Transfer “Values”
It is important to make sure your will or trust expresses what you value. You can add incentives for behaviors you want to encourage, like remaining off drugs, being employed, or completing a college education.
#7 Not Preserving Tax Deferral Benefits of Retirement Plans
When a retirement account is inherited by a non-spouse beneficiary, that beneficiary can take the account out over his or her lifetime. The problem is most beneficiaries do not realize that this tax benefit exists, and they make the mistake of withdrawing the entire account immediately.
The better way to approach it is to place the retirement accounts in a Retirement Plan Trust, also known as an IRA Inheritance Trust™. This trust protects the retirement accounts from the beneficiary’s divorce, creditors, and lawsuits, and encourages the beneficiary to take it out over his or her lifetime.
#8 Failing to Organize and Consolidate
One of the biggest factors causing delays and increased cost is the inability to locate assets. We encourage our clients to have a list of their assets and where they are located.
#9 In Second Marriages, Failing to Protect Your Spouse and Your Kids
Without a proper estate plan, your spouse and kids end up being co-owners of the property. A major decision in 2nd marriages is how to divide the property to be fair to the spouse and children.
#10 Failing to Plan for Tangible Personal Property
Your heirs are more likely to fight over the sentimental items than anything else. I encourage my clients to make of list of who they want these sentimental items to go to. Also, if there is any family history, it is good to write that down so it is not lost.
#11 Access to Medical Records–Failing to Plan for HIPAA
HIPAA is the new privacy law that protects our medical records, but it can keep loved ones from being able to check on you in the hospital.
#12 Believing Estate Planning is a “One-Time Event”
This is the most common mistake. Your estate plan should be reviewed every three years to make sure it still expresses your wishes. I meet with my clients every three years for free to make sure that their families are protected.