Most people understand that a well designed estate can help them leave their loved ones with the most assets possible. They go through great lengths to develop a strong trust or will, get expensive life insurance policies or jump through hoops of other complex vehicles. And when it’s signed and notarized, clients sit back and relax, mistakenly thinking that their estate is now “safe”.
However, people tend to neglect or forget the most important step: implementation. The most brilliant estate plan or trust document is useless if you don’t follow through. For example, creating a trust is step #1 but you also have to re-title all your assets to the trust or they will still go through probate. This is a task you have to do yourself; a good estate lawyer might remind you to do this but will not do it for you. You must complete the appropriate forms at your various banks, brokerage firms, car dealership, etc. For example, have a home you want to leave to one specific child and a car you want to leave to the other child? Unless the deed is officially assigned to the trust (so the Trustee can follow through with your written trust instructions), a probate judge gets to decide who it goes to.
Another common error is not changing your beneficiary designations. The beneficiary designation that you assign to each asset (usually done when you first open the account) supersedes any information in your will or trust. Again, this is a simple form that needs to be completed and updated periodically. Did you buy a life insurance policy after your first marriage? You probably filled out the designation form with that spouse’s name when you opened the account. Now you have remarried and have two kids and want the benefits to be given equally to all three. And don’t forget to fill out the contingent beneficiary designation. Many people name their spouse as primary beneficiary but if that spouse passes away before you, the asset will go to the contingent beneficiary on file. And if you have no contingent? Yup, you guess it, it goes to your estate and most likely a probate judge decides. Don’t have kids? Assign the contingent beneficiary to your trust or favorite charity.