While proper estate planning is essential, mistakes do happen. Below are the TOP FIVE some common mistakes:
1. Conflicts between legal documents
Many clients do not realize that some property does not transfer through the estate. For example, a deed supersedes the will. In other words, if the deed is titled as joint tenants with right of survivorship, then it bypasses the will upon your death. In other words, the will can leave it to one person, but the deed will override the will.
Similarly, accounts in joint names or with beneficiaries go to the survivors/beneficiaries, despite what the will says.
2. Not leaving enough in the residue (i.e. specific bequests are too high)
Some people want to give specific gifts or amounts of money to a designated person. The remainder (or residue) is then given to the other beneficiaries. The intent is that people are not forgotten, with the bulk of the estate going to the closest family members. Unfortunately, people do not realize that the residue is sometimes smaller than anticipated. There are several reasons for this – estate costs (probate fees, inheritance tax, attorney fees, creditors) are higher than anticipated, real estate sells for less, the stock market and retirements accounts are lower than when the will was prepared, or you spend more than you expected to during your lifetime.
For this reason, you want to revise your will every few years to make sure that the distribution is as planned.
3. Not checking with executors/trustees
When drafting a will, you will need to name an executor, and potentially a trustee and/or guardian. Because there is a lot of work that needs to be done, many people are reluctant to put in the time or energy. Furthermore, some people are reluctant to become the executor because they believe that it will cause issues with other family members. It is best to confirm with the potential executor that they are agreeable to take on this endeavor.
4. Not reviewing the will after life changing events
It is important to review the will every few years. Life changing events happen all of the time, so whenever you or a family member goes through divorce, gets married, has children, loses a loved one, or has a falling out with a family member, you need to make sure that the will reflects the changes. Additionally, you want to make sure that the named executor remains up to the task.
5. Moving to another state
There are different requirements for all states. If you are moving to another state, you should consult an attorney in the new state to make sure that your most recent will is still valid.
6. Ambiguity in terms
There are times when a will is ambiguous. This can happen when there are two family members with the same name (senior vs. junior or when someone with the same first name marries into the family and takes the other’s last name). It can also occur when you give a specific item (i.e. my favorite ring to my daughter), and no one knows for certain what item you are referring. Furthermore, if you are giving percentages of your estate to family members, you need to make sure that the estate adds up to 100%.
As you are unable to clarify this upon your passing, it is imperative that all terms of the will are clear when it is prepared. If there are any ambiguities, it is likely up to the court to determine your intent.