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  • Jenny Rozelle, Host of Legal Tea

Cautionary Tales - Top 5 Estate Planning Mistakes in 2021 - Episode 27


Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle! Today’s episode of Legal Tea is a cautionary tale – normally on cautionary tale episodes, we talk about a specific real-life case with real-life clients with real facts. Today will be a tad different. Today, it’s our first episode in the new year – 2022! Does anyone else think 2021 absolutely flew by? I mean, holy cow.. And what are we talking about today, you ask? Well today, we are going to go over the top 5 BIGGEST, most costly mistakes I saw clients make in 2021 – so maybe in 2022, or whenever you #DoYourEstatePlan, you don’t make similar mistakes…


Alrighty, let’s do it!


Mistake #1 – of top mistakes I saw in 2021 … People that passed away and they had NO estate planning documents at all.


I feel like this one goes without really needing to be said or talked about – I think the latest statistic I heard was that roughly 50% of people do not do any estate planning. I’m not sure what I can say about this mistake besides … Do you want to be in the driver’s seat of who gets your assets, or do you want your respective State to decide who gets what for you?


I have a case right now I am working on where the family consisted of Dad, Mom, and 2 kids. Dad passed away, which wasn’t super-unexpectedly actually, and the house was JUST in his name alone. (Side note – I see this happen all the time for a variety of reasons, so if you’re like this, pay attention!) Well, Dad did not have a Will, which meant his estate assets go by the Indiana intestacy laws. We’ve talked about intestacy laws on here before, but in case you’re new here, intestacy laws are basically a built-in estate plan for how assets are distributed when people pass away without a Last Will and Testament.


One would think the Indiana intestacy laws would say, “Oh everything goes to his wife, right?” Wrong. Actually, ½ of his estate goes to his wife and ½ goes to his kids. Thankfully, everyone was on the same page – so in this case, we had the kids waive their interest in Dad’s estate, so the house could go to Mom. The issue with this is 1) what if the kids were estranged … boneheads … etc.? And 2) My rule of thumb is that if you’re making me, the lawyer, work “more” than a routine case, there’s a good chance that comes with a slightly higher price tag. In my defense … If I’m working MORE and HARDER, why would there NOT be an increase in the fee?!


So yes people, PLEASE #DoYourEstatePlan … and seriously. Like Nike, just do it.


Mistake #2 – of top mistakes I saw in 2021 … People that passed away and their estates could have easily avoided probate. But they didn’t.


Probate – let’s start with what that word even means. It’s a word that gets tossed around often. So probate is a legal court process that 1) occurs if someone does not have a Last Will and Testament or 2) if someone JUST has a Last Will and Testament. (That’s a common misconception – people think that if you do a Will, that avoids probate. Probate is the legal process that makes the words on the Will come to life, actually!)


Probate gets assets from the decedent (the deceased person) to their beneficiaries, if there are assets in 1) their name alone and 2) have no beneficiaries attached. There are few different ways to ensure your estate stays out of probate land, but it’s probably best you surround yourself with qualified professionals – like an attorney, a financial advisor, and/or accountant.


Those professionals look at things from different perspectives – financial advisors can easily place beneficiary designations on assets to ensure probate is avoided, but the attorney would be able to identify, “Wait – do we WANT money freely flowing to that person? Are they minor? Are they disabled? Do they battle personal issues like addictions, for example?” There are ways to accomplish probate AND leave your beneficiaries in a great position where they will be able to succeed.


The deal about probate is that 1) it takes time; 2) is a public process (so your nosy neighbors can see what’s going on in your estate); and 3) it’s costly from a legal fee standpoint. So, a lot of people shout from the rooftops about avoiding probate – and so long as you proactively work to make sure you estate plan avoids probate and accomplishes your wishes, that’s a win-win, alright!


On to our next mistake….


Mistake #3 – of top mistakes I saw in 2021 … Keeping your documents in a safe space.


A couple things along this topic – first, let’s not put your estate planning documents in a bank safety deposit box. Banks, rightfully so, get really weird when someone else (besides you) try to gain access to the box. In fact, there have been times where banks have refused to let family members access the box without a Court Order. I always tell people in these situations, you have to ask yourself, “Why? Why do they do that?” Well, it’s because of all the bad eggs – it’s because of people maliciously gaining access to the box that had no business, no legal authority to be in them – then the bank could have gotten sued OR did get sued…


I often recommend a fireproof safe at home – and from there, you can either 1) provide copies of your documents to the people in your documents or 2) tell the important people where you are keeping said documents (i.e. fireproof safe … and where said fireproof safe is…). I’m not the biggest fan in the world of giving copies to people, only because what if you change them/do new documents? You’ll have to remember 1) who all has them and 2) yank them all back.


This year, I’ve seen sooooo many posts on the State Bar Association listserv (which is like a glorified message board for estate and probate attorneys) … soooo many posts about “looking for so-and-so’s documents….family can’t find them.” There’s no secret database that our State keeps these documents. The State trusts YOU to put them in a safe place and ensure YOU are setting your people up for success.


A few episodes back, I even worked on a case where assets were held in a Trust; the family couldn’t find a copy of said Trust; no one had any idea who Mom went to to get said Trust created; etc. So what did I have to do? I had to petition the Court to ask for help … which forced the family to hire me (aka, legal fees).


So yeah, let’s make sure we keep those documents in a nice, safe spot – and maybe make sure we have people who know where you’re keeping said documents.

Nexxxxxxt mistake…


Mistake #4 – of top mistakes I saw in 2021 … This one reminds me of the saying, “The only constant in life is change.” Changes, galore! I’m talking about changes in the law, changes in your family, changes in your assets, etc. etc.


This is probably not earth-shattering news, but oftentimes, estate planning is NOT a one-time thing. Many times, we can get a plan in place to take care of changes that may be expected (i.e. future children, future grandchildren, etc.) but sometimes, it’s difficult, if not nearly impossible, to take care of changes that occur such as divorces, marriages, receiving an inheritance, starting new assets or changing assets, changes in the LAW, etc. etc.


The thing to take away from this mistake, well, it’s two things … plural! First, you just have to accept that estate planning is likely not going to be a one-time thing … maybe your situation is so straight-forward, that it is – consider yourself lucky! But what about changes in the law? Are you keeping up with those? Second, be sure you establish a relationship with an estate attorney … look at it as a RELATIONSHIP, not a transaction!


I specifically recall when I first started seeing clients and a gentleman, who was pretty straight and to the point, asked me my age. Sometimes, my head says one thing, but yet I intentionally (and wisely) choose to say something else. In my head (hey, we all have head trash!), I thought, “Is he going to question my age … like question my experience?” Instead, I shared my age and respectfully asked, “Is there a concern that you want to discuss?” To my total surprise, he perked up and said, “Actually no! I just wanted to run the math in my head … because in all likelihood, you’ll be here and still practicing when me and her pass away!”


That is TRUE. If I had a quarter for the amount of times I have heard people say, “Jenny, I have no idea if my prior attorney is still practicing…he/she may even be dead!” I’d be a rich lady! Wouldn’t it be easier to establish a relationship with someone and their firm, rather than start anew every time?!


And the laaaast mistake….


Mistake #5 – of top mistakes I saw in 2021 … and it’s probably a biggie. Why did it take a really scary pandemic to jolt people into realizing that we aren’t immortal?!


I’m actually asking that seriously. Lately, when I’ve had to share what I do for a living, a common response is: “Oh, I bet you’ve been busy these last couple of years due to Covid.” In fact, we have. Very, very busy. It’s a combination of people realizing, “Hey we should probablyyyy get our ducks in a row” and also of people that we’ve lost … my firm handles after-death administration, too, like probate and trust administration.


So this mistake should go without being said – but people, unless someone has some magic pill they aren’t sharing, we’re all going to pass away. Why would you NOT plan for that to happen? It’s inevitable. And having a clean estate plan with a bow on top would be the most beautiful gift you can leave your family, friends, beneficiaries, etc.


That wraps up our “top 5 mistakes clients made in 2021” by Jenny Rozelle, an estate planning and elder law attorney in Indiana. Ha! Take what you’ve learned today and put it into action -- #DoYourEstatePlan, my friends. I promise you’ll experience a sigh of relief in getting it done!


Alrighty … Next week’s topic is a current event/current trend -- something I’ve seen or run across that I think would be interesting on here. During next week’s episode, we’re going to be chatting about the Denver Broncos – kind of a random thing to chat about, huh? Well, there’s been some talk about the FUTURE of the Denver Broncos because the ownership of the team is held by a Trust (after someone passed away). So yeah, next Tuesday, we’re going to dive into that and see what’s going on. Until then, Legal Tea Listeners…be well and let’s make 2022 an awesome year!


Sources:

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