SEVEN COMMON OVERSIGHTS IN ESTATE PLANNING

Natural disasters, like Covid 19, are not something we can plan for; they happen at the whim of the environment. However, in the work that I do with our elder law and special needs team, I have learned that there are definitely things that can be planned for so that our loved ones do not face a crisis without our prior and proper preparation. Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.”  The moment the tornado hits is not the time to think that you should have re-evaluated your homeowners insurance, a medical or family crisis is not the time to think about the fact that you never got around to updating your estate plan. Below are some mistakes commonly seen that I encourage everyone to think about.

  1. Not having an estate plan at all. I often tell people that there are two things that will definitely happen: either they are going to die young, or they are going to die as an elderly person. This is a fact. Nobody escapes death. In our society, we are so fearful of death and aging that we often don’t want to even talk about it, but avoiding to talk about it doesn’t you can stop it from happening. In a proper estate plan, you will decide how your personal and financial affairs are handled in the event something happens to you, no matter when it occurs.
  2. Not updating your estate plan.  I recently met with a client who said her estate plan included instructions on how to care for her minor children. Her children are now 29 and 32, which means that updating her plan is well overdue.
  3. Not choosing the right person to be your durable power of attorney or personal representative.Many people automatically chose their spouse or oldest child to be their agent, but the fact they are close family members is not necessarily the right reason to choose them. It is very important to select an individual or professional who is capable of understanding the duties of these jobs and willing to execute them the way you wish and in a fiduciary capacity.
  4. Not planning for disability.  Special needs legal and financial planning is crucial in order to ensure that an individual with a disability has access to public benefits, community resources, and medical care. Family members with disabilities face many complex issues in addition to those of typical families. In many instances, an adult child with disabilities will need long-term financial and medical support in order to live as independently as possible. This is a specialized legal practice area that is important and requires a careful plan.
  5. Not updating beneficiary designations to reflect the new estate plan. If you have done new estate planning documents, it is crucial to review your current beneficiary designations because you may want to reflect those same changes. We have recently seen adult children with disabilities who are receiving public benefits who also receive investment account balances through a beneficiary designation. This one action made this child ineligible for Social Security benefits, medical insurance, and subsidized housing. Had the parent changed the beneficiary designation to a Special Needs Trust [a/k/a Supplemental Needs Trust], the ineligibility for these benefits could have been avoided.
  6. Not talking to the person you named as your Durable Power of Attorney Agent or Health Care Proxy Agent about your wishes.  Many people feel uncomfortable discussing their estate plan, medical wishes, and finances with others. If you trust the person enough to have named them to act on your behalf, you should be able to have this conversation. Your estate planning team should be able to facilitate this type of conversation. Our team assists with this on a daily basis. Open communication is the key to a good plan.
  7. Not properly planning for elder care. As an elder law team, we often discuss long-term care costs, what Medicare and Medicaid does and does not cover, veterans benefits, and hospice care. Many people are misinformed about the complexity of navigating elder care.