Three Common Real Estate Planning Mistakes

The Three Common Real Estate Planning Mistakes

  1. There is no estate plan whatsoever. I think everyone should have a will and a living will along with medical and financial power of attorney.
    • Will: You designate who will receive your property after you death. You can save lots of heartache for your heirs by taking this step. If you die without a will your property will be distributed based on your states intestate laws. More important for families with younger children, you can designate guardians for them.
    • Living Will (sometimes called health care proxy): You state your wishes for what should be done by your family if you are face with a life sustaining procedures or if you are stricken by a terminal illness
    • Medical power of attorney (sometimes called durable power attorney for health care or medical directive): You designate an agent to make important medical decisions on your behalf if you are unable to do so and/or if you are declared mentally incapacitated.
    • Financial power of attorney: You designate someone to handle the affairs of your estate, including all financial decisions, if you are unable to manage them yourself.
  2. The estate plan, which should be part of a comprehensive financial plan which was updated many years ago. The estate plan should be reviewed every few years and updated if necessary. It should also be reviewed to incorporate different goals and, more importantly, after significant life events, including births, deaths, inheritances and divorce. I see many people who last updated their estate plan documents up to twenty years ago!
  3. Retirement-plan beneficiary designation forms aren’t updated. Retirement plans don’t pass based upon the will; rather they are passed down based on the beneficiary form on files with the financial institution. Many times this task is neglected and you can see the deceased persons, or even former spouses, listed as beneficiaries. In addition if you financial institution is taken over by another institution, you should probably refile the beneficiary forms using the forms from the new company as sometimes the original beneficiary designation forms may not carry over properly. It better to be proactive that reactive when handling such delicate matters to avoid unnecessary hassles when you are grieving.

Reference: George Papadopoulos, Common Estate Planning Mistakes, At A Glance, WJS, January 13, 2015

Filed Under: Estate Planning

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