Attorney with Hook Law Center Explains Common Estate Planning Mistakes
Virginia Beach, VA (Law Firm Newswire) March 17, 2014 – Legal news outlet JD Supra recently asked attorneys to describe common, costly mistakes people make when preparing estate plans and the best ways to prevent or fix them.
Hampton Roads estate planning attorney Andrew Hook weighed in with his take on some of the top issues reported by JD Supra.
Procrastination. Too many people, perhaps unwilling to face their own mortality, wait until the very end of their lives to consider any sort of estate planning. Many will never get around to it at all.
“The earlier estate planning begins, the better,” said Hook. “This allows plenty of time to consider the options and get the best arrangements in place, without making important decisions in times of stress and turmoil.”
Too many trust amendments. The more amendments a trust has, the greater the risk of an amendment becoming lost or improperly executed.
“If a client wishes to make further changes to a trust that already has multiple amendments, we usually recommend creating a new trust that incorporates all changes and revokes the original trust,” Hook indicated. “Alternatively, all existing amendments can be revoked and replaced with a single new amendment that includes all prior changes.”
Improper linkage of assets to trusts. Revocable living trusts allow the bulk of an individual’s assets to pass to his or her heirs without going through probate, but only if title to those assets is properly transferred to the trust.
“It’s not always as simple as, say, designating the trust as a beneficiary to a financial account,” Hook cautions. “Many assets, such as retirement accounts, have complex rules. The counsel of an experienced estate planning attorney is indispensable in properly managing trusts.”
Citizenship. The unlimited marital deduction allows the unlimited, tax-free transfer of assets from one spouse to another in most circumstances, including upon the death of the transferer. But this deduction applies only if the surviving spouse is a U.S. citizen.
“If the surviving spouse is not a U.S. citizen, one option available is a qualified domestic trust, which may be created after death. A skilled estate planning attorney will never take this basic point for granted.”