Tuesday, May 01, 2007

The Most Common Estate Planning Mistake

I belong to a nationwide listserv of estate planning attorneys and the "most common" estate planning mistake is:

Failure to fund Revocable trusts (Virginia).

Failure to fund Revocable trusts (Illinois).

Not funding your trust (Hawaii).

Unfunded trusts (Michigan).

Clients who forgot to transfer real property into the trust (California).

It may seem like a no-brainer after spending so much time and money, but failure to place assets into a trust is repeated over and over as the biggest estate planning mistake clients make. And, its not just the clients who may or may not be excused by age and forgetfulness, for the worst unfunded trust problem involves children who didn't know the property had not been transferred, and, apparently, didn't take much time to review the trust itself and its supporting documents. No probate was opened and the mistakes were only found later when the kids wanted to sell the farm and discovered it was still in the name of the parents and not the trust with the statutory timelines for filing probate long past.

If you have a trust of any kind, be sure to transfer real estate, re-title non-retirement accounts and change beneficiary designations. Also, check all changes and transfers for correct information.