Episode 55: The Biggest Estate Planning Mistakes We See After Someone Dies

The Biggest Estate Planning Mistakes We See After Someone Dies

Hello, it’s Peter Klenk, Trust and Estates Attorney. So sit back with your Americano and perhaps a Vesper. If you don’t know what a Vesper is, a cocktail, look that up. It’s a great story. I love Vespers.

So anyway, whatever you’ve got, sit back, chill, relax. Let’s talk about death and taxes, everybody’s favorite subject.

Today we’re going to talk about some of the biggest estate planning mistakes that I’ve seen when somebody’s passed. Just some examples, some tales to scare you straight, I guess, just to make sure that you have your things in order.

Because I think a lot of people think, “Okay, I’ve done enough, and I don’t want to think about it anymore because it’s unpleasant.” Who wants to talk about death and taxes, right?

Or they just put it off, thinking, “Well, I’ll do it tomorrow.”

Because especially we men, we know that we’re going to live forever. I mean, we’re men. We never die. So of course you can kick this off another day until your wife smacks you in the back of the head and says, “Yeah, you’re going to die. Let’s get this done,” right?

So, what do we see as the biggest mistake? People defer, right?

How many people? I can’t even tell you when the kids say, “I know this is what Dad wanted. He just never got his will done, and now his wishes aren’t being respected.”

And then we have to explain to them, that’s not what you do. I mean, when you die without a plan at all, then the state rule kicks in. It’s made and designed to sort of guess what somebody wanted, and of course it might not respect the wish, but that’s what we’re stuck with because the person just never got what they wanted done put into place.

The other part is changes.

We have people come in and say, “Well, Dad had this will. He was looking at it for five months, and then he died. He never signed it.”

Well, it is what it is. You didn’t sign it. So if you didn’t sign it, it’s just a piece of paper we’re going to throw in the trash. It does not reflect your wishes.

So the biggest estate planning mistake is deferral, just people putting it off so that the plan doesn’t reflect what they really wanted.

That means your hard-earned money and the things you did don’t go where you want, but it also means that you can imagine there’s hurt feelings and conflict potential between family members because of that.

The other part is that people just don’t update. Laws change, people change, right?

The person you picked to be the guardian for your kids might have been the perfect person to do that job when your kid was a baby, but now they’re a teenager, and man, can this person not handle a teenager. But you said they’re the guardian. Now we’re kind of stuck with what you said, and it can be a mess.

So first of all, delaying and not doing anything, but second, not updating your things, right? Making sure that they’re there.

And then it really is a big part, just kind of being in denial of the people you’re leaving the money to.

People come in and they just say, “Hey, I’m going to leave this money this way,” and it turns out you’re leaving it to somebody who has a gambling issue, somebody who has a mental health issue, somebody who’s married to somebody who’s abusive.

And then the money you leave them, the inheritance you leave them, is taken from them, wasted, and they’re left without anything when they’re older.

When a little honesty with yourself and talking to your estate planning person, we can come up with a plan to make sure that money is there to take care of them.

So when that abusive person’s gone, they still have the money, right? Or when they get older, even though they still have their gambling habit, they have enough money to pay some rent so that they have a place to stay.

These are all important things, and I don’t know what your descendants are like when you come in, your kids, what they are like.

You have to be honest with yourself, and you have to be honest with me, and then we can plan around it and make sure that they’re safe, right? That your assets are used to actually take care of these folks.

So another thing is making sure that everybody knows your wishes before you go.

Now, if you’ve done something in your estate plan and you don’t let your kids know what it is, that’s pretty common. People don’t like talking about it. They don’t want to dispute.

But you can imagine if one of your kids finds out a week after you’re dead that you gave something to one of the other kids, you gave them less, you did something. Wow. Now they’re mad, and you’re not around anymore.

So who are they mad at? Their siblings. And then maybe litigation ensues.

So whatever your plan is, I’m big on sharing data. I think it’s a wise idea, so that if they are upset about something, they can talk to you about it.

But when the time comes, they’re not mad at their siblings, and they don’t go into litigation. They don’t hire lawyers because they know what’s coming, right?

End of story. We’re done, and everything’s then ready to go and be taken care of.

Another big thing is not letting your family know, or at least putting it someplace, where your assets are at.

So we have so many probates and revocable trusts we go through all the time. And for our clients, we encourage you, in the summary we give you, to put down a list of where to go to find your things when you’re dead.

It’s pretty simple. We don’t need your account numbers, don’t need your balances, don’t need your passwords. We just need to know what bank to go to, what financial institution, who your accountant is.

And think about it. If you have a business, who knows where your book is with your member shares or your S corporation shares? I mean, where is all that stuff?

So we encourage you guys to put that all together. It’s really simple.

You think about it. My accountant’s name is, you know, Bob, and here’s his number. Bob knows whether your income taxes were filed last year. We don’t have to go to the IRS and figure that out. It’s much easier.

Or, “I have accounts at Fidelity.”

All right, we go to Fidelity, and they’ll tell us what you’ve got. Fifteen accounts, one account, they’ll tell us. We don’t need that data. We just need to know, go to Fidelity. Right there it is.

So all those little things, if we don’t have them, handling your estate is much more expensive, much more time-consuming, and we might not find something. Just a fact, right? We just might not find something.

I can’t tell you how many kids come in and say, “Well, Mom had an insurance policy.”

“Which company?”

“I don’t know.”

Oh my God. Do you know how many insurance companies there are out there, folks?

So if we just know where to go, they’ll tell us. But if we have to sort through everybody, now you have to pay us to do that, right? So it’s much more time-consuming.

We’d rather you have everything in order so that it’s an orderly process than billing your family for a bunch of running around.

Personally, I mean, look, I like getting paid. Don’t get me wrong, but that’s irritating. It’s irritating for your kids. It’s irritating for us.

So I’d rather you put everything in order so that process is straightforward.

And that also includes things like, where did you set up a 529 for your kid?

How would your, if you both died, your parents, right, and you have a little kid, how would your brother know where to go find your 529 plan for this kid?

It’s problematic, guys.

So putting that together, especially, you can have belt and suspenders. Have it someplace at your house, but also make sure that, like us, your attorney has that list.

Because look, people die, things get thrown away, and then they all go, “Hey, was there a list?”

“I don’t know, but your sister was there throwing things in the trash right after you died.”

Now it’s gone.

So belt and suspenders, having it in a couple places is a wise idea, right? To make sure that we find everything.

So those are the top things.

Now look, if you get into something specific about, you’ve done an insurance trust, you’ve done a revocable trust, well, there are some very specific things we can talk about with those things if you’d like to speak to us.

New Jersey, Pennsylvania, that’s where we do the planning.

Making sure your revocable trust is funded. All these basic things that sometimes just aren’t done.

So we want to make sure that your plan is executed and is carried out the way you want.

So that’s it, guys. I hope you enjoyed your margarita or whatever you were drinking, or your Vesper, while you were sitting there.

Like and subscribe, and we will talk again sometime soon.

Be well.