Estate plans that work meld counseling-based estate planning to meet constantly changing client objectives and a shifting tax policy environment [e.g. on April 13, 2005 the House passed HR 8, the Death Tax Repeal Permanency Act of 2005, which would eliminate the sunset provision of the 2001 tax act with respect to estate tax repeal; other legislation trims Medicaid, and long term care insurance premiums are not capped by law or practice].

Many estate plans will fail due to avoidable planning mistakes and failure to update and maintain flexibility in the planning.

Family advisors and educated clients avoid the estate planning pitfalls for the unwary.

The following are common and may be serious estate planning errors:

1)             Unfunded Living Trusts

Quick way to probate and lose disability planning protections.

Title all assets into trust, or so they flow through trust.

2)             Old QTIP & Bypass Testamentary Trusts

QTIPs may lead to family disputes between descendent's children from first marriage and surviving spouse from second marriage.

Bypass Trusts may leave a surviving spouse with a lower standard of living than enjoyed in the marriage.

Family harmony and the 2001 Tax Act mandates assessment of all trusts and wills with estate tax planning (which were signed prior to June 2001) to protect the surviving spouse’s financial welfare.

3)             Poor Choice Of Substitute Decisions-Makers [Agent To Powers Of Attorney, Trustee To Trust Or Executor-Guardian to Minor Children for a Will]

Trustees should be selected based on trustworthiness as evidenced how the person handles their own affairs.

Many people chose an agent, trustee or executor for the wrong reasons.

Variable factors include geographical proximity, ability, time, and “respect” for other family members to serve adequately.

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4)             Lack Of or Inadequate Disability Planning

A revocable living trust should be used in addition to the power of attorney and the advance

medical directive for the management of financial and medical affairs in case of mental incapacitated.

5)             Failure To Plan For The Payment Of Long-Term Care

Living longer and the cost of long-term care militate for an assessment of long-term care insurance if a person cannot pay for long-term care out of income.

Depending upon age, everyone who can not afford or qualify for long-term care insurance, should consider long term care asset protection planning.

6)             Old Medical Directives

In light of Terri Schiavo “living wills” should be reviewed to ensure consistency with client’s decisions about life-prolonging procedures in case of terminal illness or persistent vegetative state.

Also, privacy laws now require a specific type of release in your health care power of attorney for health care agent access to medical records.

7)             Lackadaisical About Updating Plan

Estate and long term care plans should be considered for undated to changed circumstances.

Update triggers may include challenges in children’s lives [the good and the challenges, such as divorce , addictions and serious illness], the birth of a child or grandchild, serious illness or death of a family member, the purchasing or selling of real estate or a business, a marriage or a divorce

Legacy in divorce protected trusts may be favorable than outright distributions to the next generation.

8)             (Mis)use of Joint Tenancy with Adult Children

Joint tenancy titling real property, e.g. home, and personal property, e.g. bank accounts, leaves assets subject to loss of control and children’s creditors.

9)             Recordkeeping in a Shoebox

In event of disability or death, unorganized records, e.g. deeds to real property, copies of income tax returns, life insurance policies or bank statements, add family stress, administration delays and cost as well as interfere with professional’s ability to assist client.

10)         Failure To Discuss Planning With Adult Children And Take Other Steps To Avoid Down-Stream Litigation Among Family

Promote family harmony and avoid conflict/disputes when family discussion of parents’ plans with candor with other family members while alive and well.