D.I.Y. Estate Plans: 3 Common Mistakes
Ever since the stupid Internet came along, every idiot in the world is learning how to “do-it-yourself.”
People are making their own decorative flowerpots out of fishing twine and tuna cans. They are building bunkers to survive the inevitable collapse of our unsustainable civilization. And of course, they are planning their own estates.
If you have the time and acumen to plan your own estate, you’ll save thousands of dollars. That means another pallet of tuna for your bunker, which is soon to be decorated in lovely flowerpots. Of course, there won’t be any flowers because there is no natural light in the bunker, but never underestimate the beauty of imagination.
(HOLDING UP EMPTY TUNA CAN FILLED WITH SOIL AND TAKING A DEEP SMELL)
Mmmmmm, smell those lilacs.
(TOSSES THE CAN AWAY)
Like anything finance driven, you can learn to do plan your own estate, but like anything finance driven, it’s more confusing than a Matrix sequel.
Here are the three most common mistakes people make when planning their estates.
1. Improper Signatures and Witnesses
If you live in a cottage that is illuminated by whale oil, you might be the kind of person who has a hand-written will. If you are reading this, you live in the twentieth century so you’ve probably written your will on something called a computer. It probably looked similar to the device you are watching this video on. Welcome to the future.
If your will is not hand-written, you need two witnesses to sign it. Failure to adhere to signature and witness requirements invalidates the entire will. Unless you want to tear your family apart while they argue over how to
divide up all of your precious whale oil, you should find some witnesses and get some signatures.
2. Failure to Fund
People like trusts. They can dole out cash to beneficiaries as Gods unto us mortals. If you have a trust, and fund a trust, you may not fund it with assets from the trust. This isn’t exactly, “trustworthy”. Funding a trust means that you put the assets you want to be controlled by the trust in the name of the trust.
Let’s say you want to put your house into a trust with a board of trustees. In addition to making those trustees feel important with their fancy new position on a board, you are also giving those trustees complete control over that asset. You are taking it out of your name placing its ownership and operation in the trust’s name. If the property is not deeded to the trust, your heirs will need to get a judge to transfer the title. Stock, LLC ownership, insurance, investments, and bank accounts should be placed in the trust’s name or the trust should be listed as the beneficiary if you want to save your family a day in probate court.
3. Your Situation Might be Unique
Most families have at least one kid who just can’t keep any money in his pockets. Some may have more debts than assets. You might have assets in multiple states or a blood-sucking ex-partner who took the kids and takes all your money. The point is that standardized forms do not cover every case. These unique situations are rarely handled properly when people do their own estate plans. Don’t make this costly mistake. Account for any anomalies in your family or finances.
You can save a lot of money by planning your own estate but it is advisable to have a pro look it over. You’re working hard to save money. Don’t leave yourself vulnerable to penalties and legal expenses in the future.
Thanks for tuning it. This is Money Matters.