Klitzman Law Group, PLLC

What Does a Will Do and Not Do?

“Everyone needs a will. However, some people need more than that. To save on taxes and make for a smooth transition, they could really use a revocable trust, a family limited partnership or a gift trust.”

Estate plans are like life—over time, it changes, people are added and subtracted and your wishes and goals change. Regardless of your income, amount of assets or family circumstances, everyone wants to minimize taxes and facilitate a smooth transfer of property at death. Consider a recent aptly named article titled “Does Your Estate Plan Call for More Than Just a Will?” from Kiplinger to learn about what an estate plan can do, versus what a will by itself may accomplish.

Revocable trusts bypass probate, letting the property held in trust pass directly to beneficiaries. There is no public record of the trust and its instructions, and your wishes will remain private. Only the trustee knows what is in the trust and how it is distributed. By comparison, when a will is processed through probate, it becomes part of the public record and anyone who asks to see it can, including creditors, estranged family members, scammers and salespeople.

Trusts are a valuable tool for incapacity planning, as well as for private and swift distribution of assets after death. Let’s say a person has become incapacitated and is no longer able to manage his own affairs. Assets in the trust are controlled by the trustee, or the successor trustee, if the person who created the trust was the primary trustee. Trusts are recognized by all states, but a power of attorney (POA) may not as easily cross state lines. Banks and other financial institutions may refuse to accept an out-of-state POA, but, for the most part, they will not push back against a trust.

Family limited partnerships lessen the burden of estate taxes for heirs. Right now, the federal estate tax exemption is $12.06 million. However, this is scheduled to be cut by half by 2025, unless Congress takes action earlier, which is possible. By setting up a FLP and allocating assets among partners, usually family members, you can prepare for the change to the estate tax exemption and lower the value of your estate at the same time.

Tax benefits are not the only reasons to create an FLP. A Family Limited Partnership can protect assets against seizure by creditors, including plaintiffs in lawsuits. If structured correctly, they can also protect against divorcing spouses, allowing succession plans to continue minus worries about the impact of a divorce.

Gifting trusts are used to avoid Generation Skipping Transfer Taxes, known as GST taxes. The GST tax is currently calculated at a flat rate of 40% on transfers above the lifetime GST tax exemption amount, currently $12.06 million per individual. It’s the highest estate and gift tax rate. The GST becomes effective when grandparents directly transfer money or property to grandchildren or younger descendants, without first leaving it to their children. Your estate planning attorney will know how to create a trust to avoid this tax so you can transfer assets to your children for their children, without incurring a GST or estate tax.

Reference: Kiplinger (April 4, 2022) “Does Your Estate Plan Call for More Than Just a Will?”

Can a Vacation Home Be Kept in the Family for Generations?

“These vacation homes may also comprise a significant portion of the family’s wealth. Therefore, it’s understandable that homeowners want to pass their properties and family traditions to future generations.”

Many family traditions include gatherings at vacation homes. However, leaving these properties to the next generation is not always in the best interest of the family. Some people try to make a simple solution work for a complex problem, leading to more challenges, as explained in the article “Succession planning for the family lakehouse” from NH Business Review.

Joint ownership among siblings can lead to disputes about how the home is used, operated and maintained. Some children want to continue using the house, while others may see it as an income stream for a rental property. There may be siblings who cannot afford to participate in the house’s upkeep and need the cash more than the tradition. When joint ownership is presented as a surprise in a will, the adult children may find themselves fighting about the vacation home, with no parent around to tell them to knock it off.

Making matters more complicated, if the siblings live in different states and the house is in a neighboring state, ownership of the real estate at death may subject the decedent’s estate to estate taxes where the property is located. As a result, the property may need to go through probate in an additional state. Every state has its own tax rules, so the transfer of joint property will have to be analyzed by an estate planning attorney knowledgeable about the laws in each state involved.

A sensible alternative is creating a Limited Liability Corporation, ideally while the original owners—the parents—are still living. The organizational documents include a certificate of organization to file with the Secretary of State and an operating agreement. The LLC will need its own taxpayer identification number, or EIN.

The operating agreement governs the management of the property and addresses the operating expenses and maintenance of the property. It should also address the process for a child to cash in on their ownership to other children. LLC operating agreements often include these items:

• Responsibilities for operating expenses
• Process to transfer member units or interests
• Duties for regular maintenance, budgeting and approval of property improvements
• Development of a property use schedule
• Establishing rules for the home’s use

There are some costs associated with creating an LLC, including annual filing requirements. However, these will be small, when compared to the cost of family fights and untangling joint ownership.

An LLC can also offer personal liability protection from lawsuits brought by renters, creditors, or any litigants. If there is an accident resulting from work being done on the property, the owners may be shielded from the liability because they do not personally own the property, the LLC does.

In the case of divorce, bankruptcy filing, or a large judgement being filed against one of the children, the LLC will protect their interest in the property.

The real estate owned by the LLC is not part of the owner’s probate estate. This avoids the need for a second probate in the state where the property is located. Some states have adopted the Uniform Transfer on Death Security Registration Act, and the LLC membership interest can be assigned along to the terms of the beneficiary designation.

Planning for what will happen to a vacation home after death provides peace of mind for all in the family. Speak with an experienced estate planning attorney to ensure that the property and the family’s peace is preserved.

Reference: NH Business Review (March 23, 2022) “Succession planning for the family lakehouse”

Do Most People Need a Living Trust?

“If you’re putting together an estate plan, you have no doubt heard about the benefits of a living trust.”

Avoiding the costs and extensive time needed to settle an estate through probate is one reason people like to use trusts in estate planning. This type of trust allows you to designate a trustee to manage the assets in the trust after you have passed.  This is especially important if heirs are minor children or adults who cannot manage a large inheritance. A living trust, as explained in the article titled “The Lowdown on Living Trusts” from Kiplinger, has additional benefits. However, there are some pitfalls to be cautious about, especially concerning transferring assets.

Certain assets do not belong in a living trust. Regardless of their size, some assets should never be placed in a living trust, including IRAs, 401(k)s, tax deferred annuities, health savings accounts, and medical savings accounts and others .

Placing these assets in a trust requires changing the ownership on the accounts. Don’t do it! The IRS will treat the transfer as a distribution. You will be required to pay income taxes and penalties, if any are triggered, on the entire value of the account.

You may be able to make the trust a beneficiary of the retirement accounts. However, it is not appropriate for everyone. Changes to IRA distribution rules from the SECURE Act may make this a dangerous move, since the trustee may be required to empty the IRA within ten years of your death.

For practical purposes, assets like cars, boats or motorcycles do not belong in a trust. To transfer ownership to the trust, you will need to retitle them. This would result in fees and taxes. You would also have to change the insurance, since the insurance company may not cover assets owned by trusts. The cost may outweigh the benefits.

Assets belonging in a trust include real estate, especially your primary residence. Placing your home in a trust will minimize the hassle of transferring the home to heirs, if this is your plan. If you own property in another state, transferring the title to a living trust allows your estate to avoid probate in more than one state. Remember to get a new deed to transfer ownership to the trust. If you refinance or take a home equity line of credit, you may need to transfer the property out of the trust and into your name to get the loan. You will then need to transfer the property back into the trust.

Financial assets can be placed in a trust. Stocks, bonds, mutual funds, CDs, money market funds, bank savings accounts and even safe deposit boxes can be placed in a trust. There may be a lot of paperwork, and in some cases, you may need to open a new account in the name of the trust.

Once the trust has been created, do not neglect to fund it by transferring assets. Retitling assets requires attention to detail to make sure all of the desired assets have been retitled. The trust needs to be reviewed every few years, just as your estate plan needs to be reviewed. Be sure to have a secondary trustee named, if you are the primary trustee.

Trusts are an excellent option if you live in a state where probate is onerous and expensive. Assets placed in the trust can be distributed with a high degree of specificity, which also provides great peace of mind. If you believe your oldest son will benefit from receiving a large inheritance when he is 40 and not 30, you can do so through a trust. The level of control, avoidance of probate and protection of assets makes the living trust a powerful estate planning tool.

Reference: Kiplinger (March 24, 2022) “The Lowdown on Living Trusts”

What are the New IRA Distribution Rules?

“The Internal Revenue Service (IRS) recently issued much anticipated proposed regulations that clarify and revise some of the required minimum distribution (RMD) rules for qualified plans (i.e., 401ks, 403bs, etc.) and individual retirement accounts (IRAs).”

Many of the proposed distribution rules, which will be subject to further action in late spring, depend upon whether or not the original IRA owner died before or after the appliable required beginning date for distributions. As explained in the article “The Internal Revenue Service (IRS) Issues Proposed Minimum Distribution Rules” from The National Law Review, the age changed as a result of the SECURE Act, to 72.

Spousal Beneficiaries. If the spouse of the deceased IRA owner is the sole designated beneficiary and elects not to rollover the distribution, the surviving spouse may take RMDs over the deceased’s life expectancy. However, if the owner died before their required beginning date and the spouse is the sole beneficiary, the spouse may opt to delay distributions until the end of the calendar year in which the owner would have turned 72.

If the decedent died after turning 72, the annual distributions are required for all subsequent years and the spouse may take distributions over the longer remaining life expectancy.

Minor Children Beneficiaries. If the beneficiary of the IRA is a minor child, under age 21, annual distributions are required using the minor child’s life expectancy. When the minor turns 21, they must take annual distributions and the account must be fully distributed ten years after the child’s 21^st birthday.

Adult Children Beneficiaries. If the account owner dies after their required beginning date (age 72), an adult child who is a beneficiary must take annual distributions based on the beneficiary’s life expectancy. The account must be completely emptied within ten years of the original IRA owner’s death.

This applies only to adult children who are beneficiaries and are not disabled or chronically ill. Disabled or chronically ill adult children fall into a different category under the SECURE Act, with different distribution rules.

Special Rules for Roth IRAs. The benefits of Roth IRA accounts remain. There are no minimum distributions from a Roth IRA while the account owner is still living. After the death of the Roth IRA owner, the required minimum distribution rules apply to the Roth IRA, as if the Roth IRA owner died before their required beginning date.

If the sole beneficiary is the Roth IRA owner’s surviving spouse, the surviving spouse may delay distribution until the decedent would have attained their beginning distribution date.

If you own IRAs or other retirement accounts, speak with your estate planning attorney to determine if you need to update your estate plan. There are strategies to protect heirs from the significant tax liabilities these changes may create.

Reference: The National Law Review (March 25, 2022) “The Internal Revenue Service (IRS) Issues Proposed Minimum Distribution Rules”

How Does a Trust Fund Work?

“Trust funds are an important estate planning tool. They can protect your assets while you’re alive and help ensure that you leave money to your children or other loved ones after you die.”

To maximize the benefits of a trust fund, you’ll need to understand how trusts funds work and how to create a trust fund the right way, advises this recent article from Yahoo! Money titled “How to Start a Trust Fund the Easy Way.” You don’t have to be a millionaire to start a trust fund, by the way. “Regular” people benefit just as much as millionaires from using trusts to protect assets and minimize taxes.

A trust fund is an independent legal entity created to own assets and ensure money and property are used to benefit loved ones. They are commonly used to transfer assets to family members.

Trust funds are created by grantors, the person who sets up the trust and transfers money or assets into it. An experienced estate planning attorney will be essential, since creating a trust is not like going to the bank and opening an account. You need the assistance of a professional who can create a trust to reflect your wishes and comply with your state’s laws.

When assets are moved into a trust, the trust becomes the legal owner of the property. Part of creating the trust is naming a trustee, who manages the trust and is legally bound to follow the wishes of the trust following the grantor’s wishes. A successor trustee should always be named, in case the primary trustee becomes unwilling to serve or dies.

Subject to compliance with specific requirements, assets owned by an irrevocable trust are not countable towards Medicaid, if someone in the family needs long-term care and is concerned about qualifying. Any transfer must be done at least five years in advance of applying for Medicaid. An elder law attorney can help in preparation for this application and to ensure eligibility. This is a very complex area of law. Do not attempt it alone without the assistance of an elder law attorney.

Trusts can have a long or short life. Some trusts are held for a child until the child reaches age 25, while others are structured to distribute a portion of the assets throughout the beneficiary’s lifetime or when the beneficiary reaches certain milestones, such as finishing college, starting a family, etc.

A revocable trust allows the grantor to have the most control over the assets in the trust, but at a cost. The revocable trust may be changed at any time, and property can be moved in and out of it. However, the assets are available to creditors and are countable towards long-term care because they are in the control of the grantor.

The irrevocable trust requires the grantor to give up control, in exchange for the benefits the trust provides.

There are as many types of trusts as there are situations for trusts. Charitable Remainder Trusts reduce estate taxes and allow beneficiaries to receive an income stream for a designated period of time, at the end of which the remainder of the trust’s assets go to the charity. Special Needs Trusts are created for disabled persons who are receiving means-tested government benefits. There are strict rules about SNTs, so speak with an experienced estate planning attorney to ensure that your loved one continues to be eligible, if you want them to receive assets from you.

Trusts are often used so assets will pass through the trust and not through the probate process. Assets owned by a trust pass directly to beneficiaries and information about the assets does not become part of the public record, which is part of what occurs during the probate process.

Your estate planning attorney will help ensure your trusts are appropriate for your situation, achieve your specific wishes and are in compliance with your state’s laws. A boilerplate template could present more problems than it solves. For trusts, the experienced professional is the best option.

Reference: Yahoo! Money (March 18, 2022) “How to Start a Trust Fund the Easy Way”

What Is the Gift Tax for 2022?

“Two years into the pandemic, countless lives have been impacted by COVID 19. Faced with daily reminders of the consequences of this illness, estate planning seems to be on the minds of many.”

The federal per person lifetime estate and gift tax exemption is now $12,060,000. This is the highest the exemption has ever been. It sunsets at the end of 2025, when it will be reduced by half. Now is the time for estate planning preparations for 2022 and beyond, says a recent article titled “The State of Estate Planning 2022” from the New Jersey Law Journal. Here are some planning strategies to consider.

Spousal Limited Access Trust, or SLAT. This is an irrevocable trust to benefit the spouse and accomplish a few different tax and non-tax goals. The grantor removes assets from their taxable estate and places them in the SLAT, while giving their spouse access. The beneficiary spouse may use the trust assets for joint expenses, which gives the grantor-spouse indirect access to the trust assets.

Initial SLAT beneficiaries may only include the beneficiary-spouse or the beneficiary-spouse and their descendants. If created as a grantor trust, the trust income will be taxable to the grantor-spouse rather than the trust itself. SLATs may also be drafted with Crummey withdrawal powers, so transfers to it qualify for the $16,000 gift tax annual exclusion.

A downside to consider: if the beneficiary-spouse predeceases the grantor-spouse, the grantor-spouse does not have access to the assets, which will then pass to the grantor’s descendants or other beneficiaries.

Creation of an LLC to Own Property or Business Interests. A Limited Liability Company can own real property, including vacation homes or business interests in the family. This lets parents pass future appreciation to children, free of estate tax. The LLC, which can have voting and non-voting membership, is created through an agreement between family members who own the assets being contributed. The first generation transfers the assets to the LLC in exchange for 100% of the voting rights.

The voting rights are of little economic value. However, this allows the first generation to manage and control the LLC. The first generation then gifts non-voting interests to the next generation, at which point the assets and any future appreciation are removed from the first generation’s estates for estate tax purposes.

Irrevocable Trust for Single Life or Second-to-Die Life Insurance Policy. This is often referred to as a Wealth Replacement Trust. It is a life insurance policy owned by an irrevocable trust. The proceeds of the policy are typically not subject to estate taxes upon the death of the insured. The trust is designed to own a single life or a second-to-die life insurance policy, protect the proceeds upon the death of the insured and administer the proceeds for the insured’s descendants.

The Generation Skipping Trust. A GST can be used for gifts made during life or transfers occurring at death to skip persons—a person who belongs to a generation that is two or more generations below the generation of the donor. For example, a grandchild is usually the skip person to the grandparent.

The GST tax is calculated on the amount of the bequest transferred to a skip person, after subtracting any GST exemption allocated to the bequest, at the maximum gift and estate tax rates. The current GST exemption is $12,060,000. Note this credit is separate from the $12,060,000 unified gift and estate tax exemption.

Speak with an experienced estate planning attorney about these and other strategies used to achieve the family’s goals and minimize tax liability.

Reference: New Jersey Law Journal (March 18, 2022) “The State of Estate Planning 2022”

What are the Pitfalls of a Charitable Remainder Trust?

“A charitable trust can be set up in different ways and have various tax impacts. Two common types are the charitable remainder trust and the charitable lead trust. There are also variations within these categories.”

If you have discretionary funds and are philanthropically minded, a charitable trust can serve you well, giving money to an organization you want to support, while passing assets to beneficiaries without burdening them with estate or gift taxes. Is a charitable trust right for you? Some of the answers can be found in a recent article from U.S. News & World Report titled “Should you Set Up A Charitable Trust?”

Some basics to consider about charitable trusts are:

• There are a number of different types of charitable trusts.
• Consider all disadvantages and alternatives.
• Make sure a charitable trust works with your estate plan and your long-term financial plan.

The most common types of charitable trusts are the Charitable Remainder Trust (CRT) and the Charitable Lead Trust. For the CRT, funding begins with cash or other assets, like stocks. The trust pays an income stream to family members or beneficiaries while they are living or for a set period of time. When they die, or when the time period ends, the remaining assets in the trust go directly to the charity.

For a Charitable Lead Trust (CLT), payments first go to the charity and then the remainder transfers to the beneficiary at the end of the trust term. One of the benefits of the CLT is to reduce the beneficiary’s tax liability, while giving the estate a charitable deduction.

An estate planning attorney will help refine these choices to the ones best suited for each individual. The CLT and CRT let you support a cause you believe in, while alleviating the tax burden to loved ones.

Charitable trusts are also useful when wishing to sell an asset. If an asset with a large capital gain is to be sold, like real estate, individual stock or a business, the asset may be moved into the charitable trust. The trust becomes the owner of the asset, and then the asset can be sold, avoiding the capital gain. Speak with your estate planning attorney to ensure that this is done correctly.

What about the disadvantages of a charitable trust? There are fees to establish and maintain a trust. Charitable trusts are usually irrevocable, so if your financial situation changes, you may not be able to gain access to the funds. There may also be some pushback from heirs or family members who would rather see your money being given directly to them and not a charity.

Make sure that the benefits you and your heirs seek to gain from establishing a charitable trust, whichever type you use, outweigh the management costs. Do not create a trust with money you may need in the future. Charitable trusts are feasible only if you have already paid off all debts and are confident you will not need any of the assets in the future.

The exact amount to put in the trust should be carefully considered, with an eye to future expenses and your overall financial status. Your estate planning attorney may wish to meet with you and senior officers from the charity to ensure a clear understanding of your wishes and make sure that this is the best solution for all.

Reference: U.S. News & World Report (Feb. 23, 2022) “Should you Set Up A Charitable Trust?”

What Should You do If It Is Possible an Elderly Parent Is Being Scammed?

“In the wake of the coronavirus pandemic, many older adults are more socially isolated than ever—and thus more vulnerable to being financially victimized.”

New best friends and unusual transactions could be signs of elder financial abuse, which extends far beyond the robocalls purporting to be from the Social Security Administration or the IRS. The majority of elder financial abuse cases reported to agencies involve people known to their victims, including relatives, neighbors and so-called “friends.” Stealing a Social Security benefit or forging legal and financial documents, along with misappropriating cash, jewelry, and credit cards are part of the $36.5 billion cost of elder fraud, according to the National Council on Aging.

A recent article from AARP Magazine titled “Spot the Red Flats of Elder Financial Abuse” tells the reader what to look for.

Out-of-Character Spending. If your frugal mother’s credit card statement shows she is buying expensive items or making large withdrawals, contact the bank immediately to challenge the charges and consider shutting down the card. Unusual financial activity should be a red flag they are being scammed, especially if they have no memory of the transactions.

If possible, create a transparent system where both you and your parent can monitor finances. The more you can be involved with their record keeping, the less time a scammer can go undetected.

New Best Friends Who Seem Inappropriate. People who live alone and do not have any social outlets are vulnerable to offers of friendship, even if they come with financial requests. Some of these new friends will try to push family members away from their victim, another red flag to family members to step up contact and involvement. Isolation is a powerful strategy, as is creating a dependency for helping with everything from taking them to a doctor’s office to making trips to the bank.

Losing the Ability to Manage Money and Cognitive Decline. Alzheimer’s disease or other types of dementia can progress so slowly as to initially go unnoticed. People with dementia are extremely vulnerable to the wishes of people who are physically present with them. A welcoming friend who suggests handling their finances may be given the keys to the kingdom, without any notice to the family.

When a third party has access to an older adult’s private information, like Social Security numbers, account numbers or passwords, the victim can very easily be scammed. Set up their accounts to have a trusted family member named, so any changes require notification, wherever possible.

Mobility or Frailty Issues Are Vulnerable to Able-Bodied Scammers. An elderly person who cannot get to the bank and has not embraced online banking will welcome the help of a friend, even if the friend’s intent is questionable. People with physical or mental impairments should not be left to attempt to manage financial or legal matters on their own. Setting up automatic bill payments for recurring bills like rent, cellphone, utilities and other payments will make their lives easier and their assets safer.

Regular involvement with an elderly person’s life is the best deterrent. Just like bright lights and video cameras will send a thief to another house, the presence of family members in an elderly person’s life is the best deterrent to financial scams. People are least vulnerable when they are protected by a network of watchful, honest and caring family members.

Reference: AARP Magazine (February 28, 2022) “Spot the Red Flats of Elder Financial Abuse”

How Does Gift Tax Exclusion Work?

“In 2022, the annual exclusion for Federal Gift Taxes increased to $16,000 per person per year. Although there is near-universal acceptance of the importance of gifting, there are several issues you should consider before making any gifts.”

How gifts are made could have major impacts on heirs, especially if the recipient is a minor. There are many drawbacks to gifting outright, including limited control over gifts, exposure to creditors, divorce and litigation. Trust options are the recommended strategy, as discussed in the article “The Annual Exclusion For Gift Taxes Has Increased to $16,000—What Issues Should I Consider” from Mondaq.

When gifting directly to minors, a custodial account (ITMA) offers some structure. However, if the account terminates when the minor becomes of age, you then have a young person with no control and a lot of money. This is usually a bad combination.

For example, what if the annual exclusion gift of $16,000 is placed into a custodial account when the heir is nine and ends when the heir celebrates their 18^th birthday? Even if the account earns no interest, by the time the heir reaches age 18, they will have complete access to $160,000 with no restrictions.

If there is a change to the custodian before the minor comes of legal age, the UTMA allows a primary custodian to name a successor. However, if this does not happen, the process of naming a successor custodian is generally burdensome and expensive.

Trust options or a transfer to a 529 plan are better options offering a lot more control by a trustee. Trusts allow assets to be used for a variety of needs, while the 529 plan limits withdrawals to be used for educational needs. The trustee may also continue to manage the account long after the heir has reached legal age, which to most people makes good sense.

Another option is a Section 2503(c) Minors Trust, which can be used for annual exclusion gifts to minors. They require that assets of the trust be applied for the minor who is a beneficiary of the trust. However, there are limited exceptions. There can only be one beneficiary and they must be under age 21. When the beneficiary turns twenty-one, they must be given the ability to withdraw the assets. However, any assets remaining in the trust can be kept in the trust and the trust itself can be converted into another form of irrevocable trust, allowing for continued annual exclusion gifts to be made for the beneficiary.

For more control, consider an irrevocable gift trust. The IGT can be used for the annual exclusion gift and is a smart choice for gifts greater than the annual exclusion when a Gift Tax Return is required. The person creating the irrevocable gifting trust appoints the trustees and should name alternates, if the primary trustee is unable to serve. The trustee then has discretion to manage the assets, including over distributions. Unlike a 2503(c) Minor Trust, the irrevocable gifting trust does not have to terminate or permit unrestricted access to income or principal.

Reference: Mondaq (March 2022) “The Annual Exclusion For Gift Taxes Has Increased to $16,000—What Issues Should I Consider”

Common Estate Planning Mistakes

“Your last will and testament is one of the most important legal documents that you will ever make. It allows you to direct where you want your property, guardianship and debts to go after you die, and allows you to appoint an executor to act out your wishes.”

Despite the pandemic, two out of three American adults still do not have a will. Procrastination and thinking they don’t have enough assets to warrant a will are the top reasons given, says the article “The Biggest Mistakes People Make in Their Wills, According to Estate Lawyers” from Huff Post. Estate planning lawyers know this is a tragic mistake, since everyone over age 18 needs some estate planning documents. They can spare family members considerable financial and emotional stress during a terrible time.

Here are the biggest mistakes seen by estate planning attorneys:

Assigning co-executors. One executor and an alternate executor are all you need. If you make all of your children executors, the chances they will all agree are unlikely. Selling a house is the best example. What if one child wants to keep the house and two want to sell? What if they do not agree on the price?

If the parents insist on naming all of the children executors, then one solution is to have everyone sign waivers to agree in advance how disputes will be settled.

Thinking all you need is a will to avoid probate. A valid will has to go through probate and, depending on where you live, be administered by the court to some degree. However, if your estate includes assets titled solely in your name, without a beneficiary designation, they will go through probate before being distributed according to directions in the will. Talk with an estate planning attorney about how trusts work, how to title assets and other strategies to minimize probate.

Not being clear about personal possessions. Simple language of leaving “an equal share” to your heirs makes conflict inevitable. When loved ones die, emotional attachments to possessions become powerful. Siblings who always got along may find themselves battling over items they never seemed to care about in the past. The more discussions you can have with children before passing, and the more details in the will, the less likely the disputes will grow into litigation. If one of your children wants the family silver, write it in the will.

Failing to update wills and estate plans. Certain life events seem obvious times to update a will and estate plan, like the birth of a new child or grandchild, divorce, marriage or relocating. However, even without these “trigger” events, an estate plan needs to be reviewed and revised every three to five years. If you have children and grandchildren, for instance, and one of the children dies, the grandchildren will not inherit anything, unless provisions are made in the will.

Will an inheritance be helpful or harmful? Leaving a large amount of wealth to a young adult can be destructive, even if it is legal. An outright gift to a college student could disqualify them from financial aid. A large gift to a family member contemplating divorce could end up in the bank account of the ex-spouse. Think carefully about the short and long-term impact of the inheritance.

Keeping your will and estate planning documents a secret. Make sure people know where to find these documents and keep them in a safe place. If wills are not found, it is as if they do not exist.

Trying to do it yourself or with someone who is not an experienced estate planning attorney. If the will is found invalid by the court, it is as if you do not have a will and state law will determine what happens to your property. Even the best intentions from an attorney who practices in another area of the law puts your estate and your family at risk. Estate planning is complicated, and mistakes quickly become expensive for heirs.

Reference: Huff Post (March 8, 2022) “The Biggest Mistakes People Make in Their Wills, According to Estate Lawyers”