6 Reasons Why Estate Plans Fail

A huge percentage of estate plans fail to achieve their goal – to move assets efficiently and effectively while minimizing costs. We know that most people do not even have a plan. But when they do,  why don’t they work properly?

Let’s explore the biggest problems with estate plans:

#1 Poor Documents

The number one reason estate plans fail is that the documents are not custom-tailored to your family’s issues. These are usually the documents you find online. Whether you find them on Legal Zoom or other internet sites, these trusts are a one-size-fits-all Living Trust. We call these documents cookie-cutter trusts. They might work. But often, they just don’t cut it.  

In reality, lawyers have to thank Legal Zoom and these online documents. They provide us with so much business after someone passes away. Just to change a couple of items in the trust or to clarify an ambiguous term, lawyers charge thousands of dollars. I guarantee you that every probate lawyer has seen one of these ambiguous clauses, and know that they will be hired for a very long time. 

So, what did you accomplish by paying a couple of hundred dollars for these cookie-cutter trusts? Nothing. Did you save any money? No! You actually caused your heirs to spend tens of thousands of dollars because of your ineffective estate plan. I always say, do it once, do it right.

#2 No Nursing Home Protection

What do I mean by that? Well, when someone gets dementia or gets older, they usually find themselves in a nursing home. 

Nursing homes are pretty expensive. Did you know that in Los Angeles it’s about $10,000 a month for a nursing home? In a year’s time, you would have to pay $120,000. Do you have that amount saved in your bank account today? No? Well, you are not alone. 

You have seen a situation where you desperately need money to pay the nursing home. You sell your assets, stocks, and then you get hit with a huge tax bill at the end of the year. Thanks, Uncle Sam!

Well, you might be wondering if there is a way to avoid it. There is. 

With a good estate plan in place and the right powers of attorney, coupled with doing the right provisions inside of those documents, you are well on your way to avoid all these hefty costs. This is what is referred to as proper estate planning.

#3 No Funding

Funding basically just means putting all of your assets inside the bucket. Your trust is your “bucket”. If you go to an online trust or use Legal Zoom, you are creating an empty bucket. The bucket might not be as strong as you’d like, but it is still technically a bucket. 

The problem is, you put nothing in that bucket. This means that the bucket doesn’t control any of your assets. 

The title needs to be in the trust’s name. If not, the bucket does nothing unless I go to Court and fix the issues ($$$). So, did you save any money by using these cookie-cutter documents? No, of course not. 

Don’t allow yourself to continue having an empty Trust.  Schedule a strategy session today!

#4 No Timely Updates

The law changes. You change. Your family changes.  Your son or daughter are not toddlers anymore. You are seeing the type of person they are growing up to become. Is that the same mentality you had when they were five? Of course, not. Does your plan need to be reviewed? Of course. 

Is your plan older than 15 years? Do you know that there was a huge law change in 2011?  Was your plan done before 2011? Did you make sure that your documents are up to date?

You should, in order to ensure that your estate does not fail when you pass away.

#5 No Remarriage Protection

This is a fairly common problem. Let’s say you have a wife, and she passes away. You start to feel lonely, so you go ahead and meet someone. Eventually, you remarry, which is perfectly fine as it is your right. 

You have probably seen the celebrity young woman marry the 80-year-old man for his money. Yes, you obviously want to prevent that, but what we are talking about here is something all too familiar — incapacity. 

After you remarry, let’s say over time you develop Alzheimer’s. We see a common pattern at this exact moment. 

What we usually see is a game called capture the queen or capture the king. Whatever family members are closest to the person developing Alzheimer’s is usually the person that ends up with all the assets — EVEN IF THEY ARE NOT FAMILY. Now, we have to go to court to undo everything because there wasn’t proper estate planning in place. Is there a way to protect your half of the assets that you intended to go to your spouse from going to another person they married or their family? 

What do you do? Can you set up your documents in such a way that you are guarded against it? I’ll tell you right now, most cookie-cutter trusts do not guard against this at all.

#6 How Do You Capture Family Legacy 

How do you capture your wisdom, life lessons, and moral values and send it down to the next generation?  How do you capture these invaluable lessons when you have tons of other issues to worry about?

At this point, after death, your children are not worried about retaining the wisdom you taught them. All they mostly care about is how to make sure my brother or sister isn’t going to sue me in court for money that was given to me by my father or my mother?         

How do you even pass on your wisdom when you have all these other issues? How do you pass it on once you’ve done everything properly?

Don’t allow yourself to be unprepared for the inevitable! Make sure to avoid these potential disasters by scheduling a strategy session today!