Estate planning is not ado-it-yourself endeavor; there are plenty of opportunities to make costlymistakes. The biggest mistake is having no estate plan. Why? Because yourlifeâ€™s work may escheat to your stateâ€™streasury by default.
At the very least, a proper willcan avoid legal landmines like the escheatrule.
Escheat is the principle thatthere is no such thing as estate-limbo. Basically, an estate can sit in limbofor only so long before it gets swallowed up by the state where the decedentlast resided. Consider the case of Roman Blum in New York, as reported in a recentForbes article titled â€œN.Y. State Could Get $40 Million From ManWho Died Without A Will.â€ Youcan read all of the details in the original article, but Mr. Blum likely didnot intend the State of New York to benefit from his lifeâ€™s work as a realestate developer.
Here are the lessons to takeaway from this case:
- Plan for yourloved ones. If you donâ€™t make at least a basic will, your stateâ€™s laws ofintestacy may apply. To see what would happen in your state, visit the free,interactive website mystatewill.com.
- Reviewbeneficiary forms. Many assets are transferred via designations onbeneficiary forms â€“ from your retirement accounts to life insurance and evenbank accounts. Review these forms regularly, and be sure to keep themup-to-date.
- Benefitcharities. Some people refer to this as the â€œbombâ€ clause, stating thatshould your entire family be wiped out in a single incident, your assets shouldbe distributed to specific charities.
- Sign documentsto protect yourself. Someone needs to make important decisions for you whenyou cannot do so for yourself. With legal documents like health care directivesand powers of attorney you can appoint those you must trust to act on yourbehalf.
- Make documentsaccessible. Make sure your legal documents can be found. It wonâ€™t matterhow many documents youâ€™ve signed if no one can find them!
- Donâ€™tprocrastinate. Apparently, when Mr. Blum was ailing, he had finally agreedto sign the necessary documents, but passed away before getting it done.
For more information on this and otherestate planning subjects, contact IdahoEstate Planning and schedule aconsultation. Remember,good planning is no accident.