Unfortunately, sometimes people avoid estate planning.

In 2018, Aretha Franklin died intestate (without a will). This has been in the news, and it’s an example of what can happen without planning ahead.

What should she have done? What lessons can you & your family learn from this situation?

Because Aretha died without a Will or Trust, her four sons and a niece will likely be fighting about who should be appointed as the executor (and other matters) in court regarding her estate. All five of them have already filed paperwork with the court. Three years later, the situation is still being worked out between the courts, the IRS, and her heirs.

This article isn’t going to go into specific details about her case. Instead, it’s looking at the big picture and how this may apply to you and your loved ones.

Failing to have a Will or a Trust highlights misconceptions that continue to exist about Elder and Estate Law.

These include:

• Estate planning is unnecessary,
• I am certain my children will all agree once I am dead and they all know who I want to handle my estate,
• Estate planning is only for the wealthy,
• I will take of this in the future,
• I don’t trust my attorney with these details,
• Or the documents are drafted bit I do not want to sign them right now.

Here are some of the most common mistakes we have observed when preparing estate plans:

Not Consulting with an Experienced Estate Planning Attorney

A common misconception is that your family lawyer or a general practitioner is the most qualified lawyer to prepare your estate plan.

All individuals regardless of their degree of wealth should always consult with an attorney who concentrates on estate planning or elder law. While your family lawyer or a general practitioner may know your family history, estate planning is a complex area of law.

Attorneys who concentrate on estate planning have a thorough understanding of the consequences and implications of your decisions and will help you avoid mistakes that can be easy to make and cost you and your loved ones time and money.

Thinking That Estate Planning is Only for the Wealthy

Having a customized estate plan can help people at all income and asset levels avoid a potentially costly and drawn-out estate administration or probate process.

Probate is the legal process of administering a decedents’ or disabled estate through the local Circuit Court system. Individuals with high net-worth may need to consider additional estate-tax implications.

There are countless benefits to having a well-drafted estate plan, however, I will only note the two most common.

1. A well-drafted estate plan can allow you to bypass the probate process.

This saves the individual or family money as well as keeping their situation and affairs out of the public sphere. As noted above, if a probate proceeding is needed, the process will be handled in the local Orphan’s/Probate Court and is a public proceeding, allowing your family, friends and the general public access to your estate.

2. Second, by bypassing the probate process, you ease the burden on grieving families.

This allows your beneficiaries quicker access to potential inheritances, and ultimately means more money available to them.

Being Unwilling to Face the Future

Thinking about your estate plan before a serious illness or accident occurs is can be a scary and unpleasant experience.

While it may be frightening or overwhelming to plan for your own disability or death, a good estate plan will help ease your fears and prepare you and your family for the unknown.

Creating documents such as a Power of Attorney for Property and Power of Attorney for Healthcare, allows you to name an individual (an “agent”) to handle your financial affairs and medical decisions for you if you should become disabled.

If you become mentally or physically incapacitated without a Healthcare Power of Attorney, Maryland law provides a list of priority governing who can make most healthcare decisions for you as a healthcare surrogate.

Surrogacy, however, does have its pitfalls. The surrogate may not know what your wishes are because you have not discussed personal healthcare preferences with them. A surrogate may also be a distant relative or estranged family member who is unwilling or unable to be present to make the required decisions. Two or more family members in the same class of priority may disagree on the best course of action and a surrogate cannot consent to certain forms of mental health treatment.

If no surrogates are available the State of Maryland, which has a vested interest in protecting your person, may appoint a Guardian of Person through the court system to make your healthcare and related decisions for you.

“My Attorney Doesn’t Need to Know That”

Your estate planning attorney can only advise you based upon the information you have given to him or her.

While your estate planner will likely have you fill out a detailed questionnaire designed to avoid oversights, it is best to begin gathering a list of your assets, and how they are titled, so your estate planning attorney can prepare the best estate plan tailored specifically to you and your situation.

You must provide the attorney with all relevant facts and information about your assets and wishes for their distribution as an attorney can only advise you based upon the information you have given them.

Too often clients forget about assets they own or inheritances they have received, which can result in estate tax liability or headaches for their Executor, Trustee and beneficiaries.

Further, be sure to tell your attorney how your loved ones interact, their financial status, and any future issues you see arising upon your death. For example,

• Do you and your spouse have children from previous relationships?
• Do your children get along?
• Are your beneficiaries likely to contest your estate planning documents?

Informing your attorney of these matters ahead of time will allow him or her the opportunity to include provisions in your documents to safeguard against fighting family members, or a will or trust contest.

Additionally, you should discuss with your estate planning attorney how you want to make gifts to your family or beneficiaries of your estate plan. Improperly transferred gifts to family members and beneficiaries may create the possibility of income tax or future financial obligations, such as property tax or insurance on an inherited home.

All gifts during life and upon death should be discussed in detail with your estate planning attorney.

Giving Beneficiaries Too Much, Too Soon

I always encourage my clients to discuss their estate plans with their children and manage expectations from the beginning.

Inheritances can be a difficult topic to navigate with your children who may expect more than they’re going to receive, especially if you or your spouse are charitably inclined.

Alternatively, leaving your estate to your beneficiaries in a trust is an option allowing the Trustee to control how assets are invested, and when and in what amount distributions are made. This may help curtail any beneficiaries’ reckless spending or bad investment decisions.

Outright distributions to your beneficiaries may also open the door to creditors. A properly structured trust can provide what’s known as “asset protection” in the event of a lawsuit or a creditor’s attempt to seek payment from your family or beneficiaries upon receiving funds.

Thinking Their Decisions Have to Be Final

A good estate plan should always be reviewed on a regular basis and after a major life event, such as a marriage, new house, new family members, or the death of a loved one.

Clients occasionally think that once they sign estate planning documents, they are unable to change them. The truth is, most estate planning documents can be amended or revised throughout your life.

While your attorney may not recommend any changes or revisions to your documents, a good rule of thumb is to have your estate plan reviewed every 3 to 5 years to account for changes in the law, cases which interpret of the law, or your life.

Thinking Your Estate Plan is Finished Once You’ve Signed Your Documents

Many clients think that once they have consulted with their estate planning attorney and signed their estate planning documents that the process is over.

However, there are often steps that you need to take once you’ve fully executed your estate plan. First, estate planning attorneys will always instruct you on how to appropriately title ownership of your assets to follow your estate plan. Failing to follow their instructions can undermine all the thoughtful and hard work, and money expended to create your estate plan.

Additionally, be sure to keep all of your original documents in a safe place, such as a safe deposit box or fire-proof box.

In Maryland, you also have the option of placing your will on file with the Register of Wills office for the county where you live.

Remember, every estate plan is and should be uniquely prepared for each individual or couple.

Planning for the future now will provide priceless comfort and security for your loved ones after your death.

Careful consideration should be given to who you allow to prepare your estate planning documents, and how you plan on distributing your hard-earned assets after your death.

We invite you for an Estate Planning Wellness Check! Get started today »

Planning ahead is a gift to your loved ones!

Richard K. Abraham, Esquire

Mr. Abraham is an experienced attorney and founding member of the Law Office of Richard K. Abraham. The Sparks, MD office of the firm concentrates its practice in Estate Planning, Elder Law, Probate, Medical Assistance (Medicaid), Guardianship, Asset Preservation and Fiduciary Representation.

He is an active member in a number of professional organizations that focus on law, the senior community, and estate planning. He works with clients in Central Maryland, especially in Towson, Hunt Valley, Lutherville/Timonium, Parkville, White Marsh, Bel Air & Northern Baltimore City.

Schedule a consultation to help you and your loved ones.