Creating a Houston estate plan is critical to ensure an individual’s wishes are met after their passing. However, when estate plans include mistakes or are not done properly, they can cause major, costly headaches for loved ones. Below are some common pitfalls that individuals should avoid when drafting or updating their estate plan. Also, check out our eBook on the Top 15 Estate Planning Mistakes.
Not Naming Contingent Beneficiaries
A common estate planning mistake is not naming a contingent beneficiary on retirement accounts, trusts, and insurance policies. A contingent beneficiary is an individual who benefits from an estate plan if the primary, named beneficiary is deceased or unable to be located. If a contingent beneficiary is not named as a part of the estate plan – and the named beneficiary dies before the assets of the estate plan are distributed – the estate may be subject to Texas probate court, additional costs and delays.
Not Having a Residuary Clause
Many individuals forget to include a residuary clause in their estate plan, which can often be costly and subject the distribution of assets to further delays. When an individual does not specifically name an asset – like a piece of property or a personal belonging – and assign it to a beneficiary in their estate plan, these assets will be distributed as if there was no will in place at all. This occurs more often than an individual would think, as people acquire assets later in life or are unaware of certain things that actually count as an asset.
However, this issue can be resolved by placing a residuary clause in the estate plan. A residuary clause is a clause that disposes of any estate property not specifically named in an estate plan. The residuary clause merely states that any unnamed assets should be given to a specific beneficiary, without having to name the specific assets themselves.
Leaving Assets to a Minor Without Discussing the Guardianship Issue
Often when individuals leave assets to a minor in their estate plan, they do not include provisions discussing who will handle the asset for them until they come of age. Additionally, many individuals fail to discuss in their estate plan if the money can be spent before the minor comes of age if it is “for their benefit” – and what this term means to them. Without defining these terms and thinking through these specific situations when drafting the estate plan, the estate plan may be prone to controversy and abusive interpretations.
Because any of the above estate planning mistakes can cause delays in the effectuating of an estate plan, individuals either drafting an estate plan – or those worried about the contents of their estate plan – should contact an experienced estate planning attorney to help.
Do You or a Loved One Need Assistance from an Estate Planning Attorney?
If you or a loved one needs help drafting an estate plan – or updating an old estate plan – contact the Houston estate planning attorneys at McCulloch & Miller, PLLC. Because each estate plan is unique to the person and their situation, our skilled attorneys will create an estate plan that works for your needs and avoids common estate planning pitfalls. Through our representation, clients have created effective wills, trusts, and received critical estate planning advice. To schedule a free consultation, call our office today at 713-333-8900.