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5 Common
Pitfalls of an Outdated Estate Plan
ESTATE E PLANNING
I often find myself reassuring clients who feel guilty and embarrassed for not updating their estate plan when a major life event occurs ; however , I find it more common for someone to have never created a plan in the first place . Do you remember the last time you reviewed your estate plan ? After you were married ? Or after the birth of your first child ? Maybe 30 years ago when your children were young . Or was it prior to your second marriage ?
Most people respond to my question “ Who is your fiduciary ?” with a blank stare . A fiduciary is a person or entity you have appointed to legally control your assets when you become unable to do so . Legally , the fiduciary has to act in your best interest when serving as your
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Power of Attorney , Executor and Trustee . Keep in mind that this role can be removed if a court feels that the person is taking advantage of the situation . But , you have to ask yourself whether the person you have named is capable of acting in this capacity . Just because you ’ ve named your child doesn ’ t mean that he / she is the savviest when it comes to money .
Other questions to ask yourself about your fiduciary : Is he / she age appropriate ? Are you still in touch with the person ? Is he / she still alive and in good health ?
The second pitfall is if you haven ’ t updated your documents since your child ( ren ) were small and now they are all grown up . They may not require a guardian , but do they require a trustee to hold and invest their inheritance if they aren ’ t as mature as you ’ d like them to be . Perhaps they have a history of drug and alcohol addiction , gambling , bankruptcy , poor marriage choices , etc . These are triggering factors for naming a trustee to hold their share in trust until they meet conditions of having their inheritance released to them .
Another pitfall to consider : Are your documents up-to-date with the current law changes ? Are your documents HIPAA compliant ? The financial power of attorney law change is the most recent , with an effective date of January 1 , 2015 . If you have not had a professional review your documents , and possibly revise them , then you may be in for a rude awakening in the future .
A big issue for most clients is they ’ ve accumulated more wealth since originally drafting their estate plan . The more money you have the greater impact not having an appropriate plan will cause . Not everyone should have a basic will . A revocable living trust holds the job of avoiding probate for those assets that normally would pass through probate upon your passing . The reason being , it avoids the average time of one year and the cost associated with opening an estate .
Lastly , what state do you hold residency ? Many of my older clients relocate or become “ snow birds .” Does your plan conform to that of the laws of your true state of residency ?
Contact Conti Law to review your Estate Plan .
This Industry Insight was written by Attorney Michele P . Conti , an estate planning and elder law attorney .
Michele attended Allegheny College in Meadville , Oxford University and Duquesne University School of Law , and received her LL . M . in Taxation from Villanova University .
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