A brief overview and common mistakes I see with Wills, Trusts, and Estate Planning

What happens to your estate, the law’s fancy name for all your stuff, after you pass away? Well, that largely depends on your choices. If you don’t have a will, the law of intestate succession will direct your assets to your family children, parents, siblings, and other family members in that order. Through a properly drafted and executed will, an individual or couple can create a plan that makes specific gifts of real property, intangibles investment assets, cash, and any other item of personal property. Although a common fear I see is that one’s estate will somehow transfer to the government, or escheat, that almost never happens.

I generally try to keep my clients from spending unnecessary money in my office. Wills and related estate planning documents however, are money well spent, and a place where you get a lot of bang for your buck.

Whether or not you want a will depends on whether you want to be in control of to whom all your stuff goes after you pass. If you don’t care, you probably don’t need a will, although the biggest problems I see family members deal with arise from estates that are poorly planned with either no will or poorly put together estate planning efforts. Disputes arising from these mistakes can cost families many thousands of dollars, and an awful lot of time and headaches to straighten out. The good news is that these problems are almost completely avoidable.

Below are the 4 most common mistakes I see with estates of those who have passed. Avoiding these pitfalls will ensure that your family doesn’t deal with problems after you pass.

Mistake #1: Performing home-grown estate planning without consulting a qualified attorney. Things like putting children’s names on deeds and transferring ownership to property prior to one’s death can lead to some real problems, not to mention that the transfer of any property will create a taxable event, requiring someone to account to the IRS and State taxing authority for taxes. There are tools, like a transfer-on-death deed that allow New Mexico residents to properly, and safely transfer properties, after death. Before you transfer any properties, schedule a consultation with your attorney.

Mistake #2: Failing to properly draft and sign the will. Although a will can be fairly simple, there are some technical requirements that if not followed, can result in a will being invalid. For example, in New Mexico, a will must be signed by the testator and two witnesses in the presence of each other.

Mistake #3. The Trust. I see a lot of people, with a relatively small estate, who have paid a large amount of money to have a law firm prepare an elaborate trust, generally several volumes in length and unintelligible to pretty much every human being alive. While trusts certainly have their place, for the average New Mexican, having a trust is like using a sledge hammer to swat flies. Its usually unnecessary, and does little more than line the pockets of law firms. Beware of advice that you need a trust, unless your estate is quite large or there are other extenuating circumstances, which a good lawyer with integrity will be happy to discuss honestly with you.

Mistake #4. Failing to discuss unequal distributions with beneficiaries. There are many reasons why an individual, generally acting as a parent in tis case, would want to distribute his or her (or their combined estate) other than equally among multiple children. Where I see most problems arise however, is when a parent or parents do so without letting the other offspring know that is what they are doing. A testator is not obligated to disclose anything to beneficiaries prior to death, but a lot of expense and other challenges in the probate process can be avoided by having frank, and sometimes difficult conversations about the testators’ intentions with distributions from the estate. Your lawyer can help set up a non-confrontational environment in a professional setting to help with those conversations.

Our office is happy to help discuss your concerns, needs, and questions about Wills, Trusts, Estate Planning and the Probate process to make sure you get things situated and can rest easy on this subject. Give us a call to schedule a consultation.

Matt and the Team