Top 5 Estate Planning Mistakes

People often ask me what the most common Estate Planning mistakes are. There are 5 mistakes that are recurring. They are:

1. No Estate Plan. The most common mistake is no Estate Plan. No Will, no Trust, no provision for guardianship of minor children, no Healthcare Directive in the event of illness, no Power of Attorney which would allow for bills to be paid. It is so sad to see children coming into my office needing a conservatorship for a parent because there was no Trust providing for incapacity. 

2. The Estate Plan is not Current. Most existing Estate Plans that I see are out of date and provide for AB/By-Pass Trust which is no longer necessary for 99% of the people. It is very important that you amend a Trust with AB/By-Pass Trust provision prior to the incapacity of a spouse. If a spouse does not have capacity to amend the Trust, it is too late to remove AB/By-Pass trust provision. Also, make sure your Estate Plan still reflects your desires. Are their new grandchildren you wish to provide for, should there be a Special Needs Trust for any of your beneficiaries? 

3. No Government Benefit Planning provisions. Most existing Trusts that I see do not have any provision for Government Benefit provisions. If there is any possibility that you will need government assistance such as skilled nursing, your Trust should include the power for your Trustee to deal with governmental agencies and to apply for benefits such as Social Security, Medicare, Medicaid and other services.

4. Failure to put Assets into Trust. The failure to put assets into the Trust is the most common mistake for all Revocable Living Trusts. Real property must be put into the Trust through a Deed that is recorded with the county recorder. Bank accounts must be in the name of the Trust or they will be subject to Probate unless there is a beneficiary designation on the account.

5. Failure to have Beneficiary Designations on Assets. To the extent that assets are not going into the trust, you need to make sure you have the correct beneficiary designations on your accounts. I recommend checking all of your accounts once a year. A common problem is that accounts get moved to new bank/brokerages and you have forgotten to do beneficiary designations on the new accounts.

If you do not have a estate plan, you should make it a priority. If you have a Trust and need to have it reviewed, I see people for a free 30 minute consultation in my Walnut Creek and Brentwood offices. 

This article provides only general legal information, and not specific legal advice. Information contained is not a substitute for a personal consultation with an attorney.  LAW OFFICE OF JOAN M. GRIMES, PHONE (925) 939-1680 1600 S. Main Street, Suite 100, Walnut Creek, CA 94513  © 2015 Joan Grimes

Funding Your Trust

When a Revocable Living Trust (Trust) is created, the Grantor/Settlor, i.e. the person creating the Trust, declares that certain property is going to be held by the Trust and managed by the Trustee .  In most cases, the person creating the Trust is both the Settlor and Trustee.  The process of putting property into the Trust is called “Funding” the Trust.  The purpose of Funding the Trust is to allow property management by a Trustee other than the Settlor i.e. after the Settlor dies.  The Trustee after the Settlor is called the Successor Trustee. 

If the Trust is not funded, the Successor Trustee may be unable to manage the Trust without obtaining a court decree declaring the trust property belongs to the Trust.  This can be a complicated process and the outcome uncertain.  In addition, if the Trust is not properly Funded, there may be disputes over ownership of assets.  Therefore, if you have Trust, now is the time to make sure your Trust is Funded.   

There are two parts to “Funding” the Trust.  First, the Trust needs to list the trust property and have language satisfying the requirement for a declaration that the property listed is to become Trust property as soon as the documents are executed.

The second part is making sure your Trust has legal title to your assets.  For bank accounts, this means you need to notify the Bank or Brokerage that you have a Trust and put the account in the name of the Trust.  For real property, the Settlor must execute a Grant Deed/Trust Transfer Deed showing the real property transferred to the Trustee of the Trust.  After it is executed and notarized, it must be recorded at the county recorder’s office in the county where the real property is located.  It is particularly important to check your documents if you have sold or refinanced any real property because the lender may have required the real property to have been deeded back to you from the Trust prior to a sale or refinance.  If that was the case, you need to make sure the real property is again put in the Trust.  If you have personal property of substantial value which is not titled already i.e. a car or boat, you may want to consider doing an Assignment of Tangible Personal Property to the Trust.

In conclusion, if you have a Trust, now is the time to review it.  Make sure that all of the assets you want in the Trust have been listed in the Trust.  Make sure that there is language declaring the assets are in the Trust.  Finally and most importantly, make sure there is recorded Grant Deed/Trust Transfer Deed for real property, Assignment of Personal Property for personal property and confirmation of bank/brokerage accounts are in the name of the Trust.    If you do not know whether your Trust is properly Funded, I see people for a free 30 minute consultation in my Walnut Creek and Brentwood offices.        

*THIS INFORMATION IS NOT PROVIDED AS LEGAL ADVICE AND SHOULD NOT BE RELIED UPON IN MAKING ANY DECISION REGARDING ESTATE PLANNING.  THIS INFORMATION IS NOT A SUBSTITUTE FOR OBTAINING TAX & LEGAL ADVICE REGARDING AN INDIVIDUAL SITUATION.   (925) 939-1680.     © 2014 Joan Grimes