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Common Mistakes That Ruin Estate Planning


By: Tom D. Waldron, Esq., a real property and estate planning attorney in Melbourne, Florida and a Member of the Florida Bar.

Most articles on estate planning focus on what you should do. This article is about the six most common mistakes that ruin Estate Plans. All information pertains to Florida law. Here is a common scenario and how the mistakes effected the decedents estate.

Jack and Jill retired to Florida. Jack passed away last year. They had a Living Trust so there was no need to probate Jack=s estate. All assets are in the trust and consist of bank accounts, an IRA and their home. They had three children Able, Baker and Joan. The Trust states that upon their deaths Joan, as Successor Trustee shall deliver all assets to the three children equally with one exception. Jack and Jill paid for Joan=s five divorces and gave her a down payment on a house. Therefore, the $80,000 that Joan received is to be considered an advancement as to her portion of the estate. If any of the children have predeceased Jack and Jill, the assets that would have gone to that child shall go to the deceased child=s minor children. Able died. When Jill fell ill, Joan convinced Jill to sign a deed to the house and put Joan joint on all the bank accounts.

# 1. Joint Accounts with children can destroy estate plans. Florida courts consider all joint accounts as gifts. Upon Jill=s death, Joan gets all the bank accounts. Also if Joan fails to pay a mortgage or a credit card bill, the lender can take money out of Jill=s bank account to recover their losses.

# 2. IRA=s Jack and Jill established an IRA with the three children as equal beneficiaries. Upon Jill=s death the IRA funds will go to the children equally no matter what a Will or Trust says even though Joan got all the bank accounts. That mistake is avoided by making the Living Trust the IRA beneficiary.

# 3. Deeding property to a child prior to death. Aside from the gift tax issues, deeding property to children in an effort to avoid probate is a big mistake. Living Trusts make it unnecessary. If a child is part owner of real property and fails to pay a creditor, any judgments against that child will be a lien on that property.

# 4. Choosing the wrong person as Personal Representative or Successor Trustee can cause problems. Jack thought that since Joan was local that she was the right person to administer the estate. However, if Baker does not trust Joan, he may force probate to force Joan to comply with required court accountings.

# 5 Leaving assets to minor children. Due to Able=s death, assets go to Able=s minor children. In Florida, if more than $15,000.00 is to go to a minor child, thousands must be spent to establish a guardianship for each child.

# 6. Drafting legal documents yourself or going to anyone other than a lawyer. There is no such thing as a Simple Will, as all Wills must be admitted into Probate Court. There is nothing simple about Probate. In an effort to save a few dollars, the estate can incur thousands in legal fees and court costs and assets may not go where you want.

He who gives while he lives, knows where it goes. However, if you have saved for your children, you should take time and spend a few dollars to see that those assets go where you plan.