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7 COMMON ESTATE PLANNING MISTAKES

One should be aware of certain pitfalls when considering the establishment or the revision of their estate plan. Failure to properly address various aspects of estate planning may result in unintended consequences. The following are 7 common errors that people make.

(1) FAILURE TO HAVE AN ESTATE PLAN: Your assets may be distributed to those other than who you want, or in a manner against your wishes, unless your directions are set forth in pertinent documents. Your assets could be distributed according to the State’s intestate statute (passing away without a will) without the proper planning and instrumentation. For instance, you may desire that your spouse receives all your assets upon your death. Intestate statutes may direct that your assets be split with half to your surviving spouse and the remaining half divided equally among your children.

(2) FAILURE TO PLAN IN THE EVENT OF DISABILITY: There may be a time when you are not able to make cognizant decisions. This may stem from various medical concerns such as dementia, psychological problems, and injury causing loss of cognitive abilities. Without the execution of a financial Power of Attorney and a Health Care Directive, a court of law may appoint someone, other than who you want, to handle your financial and medical affairs. This may lead to not so desired results.

(3) FAILURE TO GET CONSENT FROM APPOINTEES: You may appoint various individuals or entities as your executor to your Will, guardian for your children, attorney-in-fact to your Power of Attorney, health care surrogate to your Health Care Directive, or trustee to your Trust. However, if you did not inform them of such and do not procure their consent at that time, they may later refuse to accept such responsibility. In such instance, someone other than your appointee may be directing your finances, making your medical decisions, and controlling your children.

(4) FAILURE TO ESTABLISH A TRUST: Many people set-up a trust mainly, in the event of their death, to provide for their children until they reach a certain age. Many people believe that their children may be too young, are a spendthrift, or should be productive on their own prior to receipt of significant distribution. Without a trust, your children may receive all their inheritance immediately upon your death. (Do you want your 18 year old to have unlimited access to your assets if you are deceased?)

(5) FAILURE TO CHANGE BENEFICIARIES: Beneficiary designations are required on various instruments such as insurance policies and IRA’s. One’s initial beneficiary designations may not effectuate your implemented estate plan. For instance, original beneficiary designations may be first to your spouse, and if your spouse does not survive you, then to your children. You may have subsequently established a trust to assist your children throughout their life. Your plan may be to leave the trust unfunded until you pass away. At that time, your plan is to direct funds from your life insurance policy and IRA distributions to the trust. However, in many instances, people forget to change their beneficiary designations (whether primary or contingent) on the applicable instruments to funnel the proceeds to the trust. This would render the trust useless due to the lack of assets to proceed as directed.

(6) UNINTENDED DISINHERITANCE: You and your spouse may have what I call reciprocal “I love you wills” where both of you leave everything to the other, and if your spouse is predeceased, then to your children. If your spouse predeceases you, you remarry, and you both execute I love you wills, and you subsequently die, your probateable assets will be distributed to your spouse (who may change their will after you decease and disinherit your children) without your children receiving anything.

(7) FAILURE TO UPDATE YOUR ESTATE PLAN: There are triggering events that may impact your present estate plan. These may include death, birth, changes in business, significant increase/decrease in wealth, and divorce. Each of these may necessitate modification of your estate plan.

It is incumbent that you that you avoid these and other common mistakes. You should continue to be aware of your present situation and apply it to your estate planning needs.

Richard A. Greenberg
Richard A. Greenberg, PLLC
2321 Lime Kiln Lane
Louisville, KY 40222
(502) 429-8496 (Direct Dial)
[email protected]
www.richardgreenberglaw.com

ESTATE PLANNING- DO I HAVE THE RIGHT STUFF?

Have you asked yourself any of the following questions?

  • DO I HAVE AN ESTATE PLAN?
  • DOES MY WILL, TRUST, POWER OF ATTORNEY, LIVING WILL DIRECTIVE AND HEALTHCARE SURROGATE DESIGNATION REFLECT MY CURRENT GOALS AND VALUES?
  • DO MY ESTATE PLANNING DOCUMENTS COMPLY WITH THE LAW, AND DO THEY PUT ME IN A BETTER TAX POSITION?
  • WHAT HAPPENS IF I BECOME INCOMPETENT AND UNABLE TO MAKE DECISIONS?
  • WHAT HAPPENS IF I AM ON LIFE SUPPORT AND HAVE NO CHANCE OF RECOVERY?
  • WHO IS GOING TO TAKE CARE OF MY CHILDREN IF I PASS AWAY?
  • WHO RECEIVES MY REAL OR PERSONAL PROPERTY WHEN I DIE?
  • HOW ARE MY DEBTS ADDRESSED WHEN I AM GONE?

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Kentucky’s New Uniform Trust Code

On July 15, 2014, Kentucky officially adopted the Uniform Trust Code (“UTC”), joining twenty-eight states that have officially adopted the UTC including Virginia, West Virginia, Tennessee and Ohio. Kentucky’s adaptation of the UTC will be codified under KRS Chapter 386B and as with any uniform law; the intent of the UTC is to provide clarity and stability to areas of the law typically governed by common law doctrine.  The Kentucky UTC brings with it some substantive changes to the law of trusts and estates, most notably: [Read more…]

Louisville, Kentucky: Where Are You Now & Where Will You Be?

Just recently, the Louisville Economic Chamber of Commerce (“Lou-E”) www.lou-e.org held its kick-off function at the University of Louisville, Shelby Campus. LouE is the result of the merger of the Northeast Lousiville Business Association and the Lyndon Area Business Association. As part of the celebration, the Mayor of Louisville, KY, Greg Fischer, was the keynote speaker. This presented the Mayor an opportunity to address some of his economic and cultural plans.

  • Growing Economy — Jobs in the Louisville Metropolitan region have expanded by approximately 4% over the last two years. The Brookings Institution has stated that Louisville is the 4th fastest growing metropolitan economy in the nation.
  • Vision Louisville — The Mayor has established a program which he calls “Vision Louisville”. This is a long term approach to how the City will look over the next 50 years. Vision Louisville is divided into short, intermediate and long term visions. The Mayor is developing programs that would make Louisville the “Digital” city of the future. [Read more…]