Avoiding Estate Planning Pitfalls In Nevada
By Kim Boyer
We have the opportunity to help people plan ahead, so their plan accomplishes their goals. We also see what happens when people do not plan at all, do not plan properly, or do not follow through. Here are some common estate planning pitfalls and how you can avoid them.
Joint Accounts. Often a parent adds a child’s name to bank accounts, usually as a matter of convenience so the child can then access the accounts on behalf of the parent. When the child’s name is added to an account, that child becomes an owner along with the parent. The child can draw out the entire account balance and use the money for himself or herself. If the child gets sued, the account could be attached to pay the child’s judgment.
When the parent dies, an account belongs automatically to the child or other person named on the account. Any last will and testament does not govern those accounts. If the parent has multiple children and intended to leave all assets equally, then the parent’s intent will not be followed.
Selecting Agents. When you plan ahead, you are able to select who will make medical decisions for you when you cannot make your own decisions. You also choose who will manage your assets.
No one knows better than you about the strengths and weaknesses in your family. You might love all your children equally but there may be one or more children that you would never want to be in charge of your money. You might also have someone in your family who is more likely to stir up trouble than to make things go smoothly. A well-thought- out estate plan takes such matters into consideration.
Lost Documents. After you have created estate planning documents, it is important that they be safeguarded and can be located when needed. Generally, if the documents cannot be found, the effect is the same as if no estate plan had ever been created. Sometimes the documents are not hidden or lost, but the family does not know there is an estate plan or where to find the documents. Make sure the person who is named to make decisions knows you have documents and where the originals can be located.
Titling of Assets or Beneficiary Designations. After you create a trust, it is important that assets you want to pass according to the trust be titled in name of the trust.
Beneficiary Designations. Check how your beneficiary designations are made. If you name as beneficiary someone who is now deceased, then that asset must go through probate. If you name someone as beneficiary and you do not want them to receive assets outright, but rather through the special terms in your trust, then you need to change the beneficiary designation to your trust.
When an individual dies owning property solely in his or her name, without a beneficiary designation, a probate is required to pass title to the property. If there is a valid will, the property passes according to its terms. If there is no will, the property passes to the individual’s heirs at law as determined under the laws of intestacy.
Adding Transfer on Death (TOD) or Pay on Death (POD) beneficiaries to your bank accounts and Beneficiary Deeds to real estate can avoid probate. Unlike joint tenancy, adding beneficiary designations to your property allows you to name an individual to inherit your property at your death without giving them any current ownership. One of the problems associated with beneficiary designations is that often times, the estate is not divided equally among the family as was intended by the individual. You can also record a beneficiary deed on your real property and it will pass to the named beneficiary on your death, subject to possible creditor’s claims.
It is very important to understand that if you have beneficiaries listed on your assets, upon your death your assets will be distributed to those beneficiaries you have listed. They will not be distributed according to your Last Will and Testament.
If you are married, before titling or adding beneficiaries to your assets, you need to take into account your husband or wife’s community property interest in the asset. You owe it to yourself and your family to give them guidance as to what you desire, and to implement your plan properly.
This information is for general informational purposes only and does not constitute legal advice. For specific questions, you should consult a qualified attorney.