Common Estate Planning Mistakes to Avoid in Louisiana

Estate plans can get complex. There are numerous documents that your plan can include. The plan should consider all the assets and debts in your estate, as well as all the needs of your loved ones. If you don’t take care when making your estate plan, you can create something unenforceable or a plan that fails to meet your needs. Being aware of the common estate planning mistakes to avoid in Louisiana can help you navigate this process more successfully.

Mistake 1: Putting Off Making Your Estate Plan

The biggest mistake people make about their estate plans is failing to have one. While ideally, you have plenty of time to create an estate plan; it is important that you begin making your estate plan as soon as possible. Accidents can happen at any time, and it is important for your own well-being and the care of your loved ones that you have a plan.

If you are incapacitated without an estate plan, your loved ones must petition the court to have important powers. Your estate plan can make this easier by providing power of attorney. If you die without an estate plan, your estate is distributed based on state laws rather than according to your intentions. Data shows that it can take up to five months longer to settle an estate without a will.

Mistake 2: Failing to Name Contingent Beneficiaries and Alternate Designations

When you create an estate plan, you name the beneficiaries of your assets, the attorney-in-fact in powers of attorney, the executor for your will, and the trustee for your trust. These are all important designations.

However, it is crucial that you do not only name one person in these roles. These individuals may predecease you or be incapacitated and unable to perform their duties. This can make the process of managing your affairs or distributing your assets more complex. By naming contingent individuals, you ensure that someone you trust will oversee your affairs or your assets if your primary individual is unable to do so.

Mistake 3: Relying Only on Your Will

A last will and testament is an important part of your estate plan and the distribution of your assets, but it has limitations. Depending on the size of your estate and the needs of your loved ones, a will may be insufficient to plan ahead.

When your estate is managed only by a will, it still must go through succession. This can be a long process, especially if you have a large estate. Additional estate planning tools, like trusts, can be used to provide additional protection.

Mistake 4: Not Maintaining and Updating Your Estate Plan

Once you have created your estate plan, it is not the end of the process. While a large portion of the work is complete, it is still crucial to consider how changes in your life affect the decisions you make in your estate plan.

Typically, you want to review your estate plan every few years or whenever there are changes in your family or finances. For example, getting married, getting a divorce, having children, starting a business, or buying a home are large changes that can impact your short-term and long-term goals for your estate.

Mistake 5: Not Funding Your Trust

If your estate plan includes a revocable or irrevocable trust, it provides you with benefits like avoiding the succession process and limiting the costs to your loved ones. However, these benefits only exist if the trust is funded, meaning that assets are transferred into the ownership of the trust. The assets must be retitled in the name of the trust. If all required assets are not retitled, they will pass through succession.

Mistake 6: Failing to Consider Your Own Incapacity

Estate plans should consider the distribution of your assets after death, but it is also important to consider your affairs if you are incapacitated and unable to make decisions about your finances or healthcare. Living wills can be used to determine your medical care wishes and put individuals in charge of important decisions.

Mistake 7: Making Your Estate Plan Hard to Find

It is important that your estate plan is in a safe location, but it is also crucial that people know what that location is. Your loved ones, your estate planning attorney, your executor, your trustee, and other trusted individuals are important people to keep informed. If your estate plan can’t be found, it can’t be enforced.

FAQs

Q: What Is the Five-by-Five Rule in Estate Planning?

A: The five-by-five rule, or five-by-five power, is a method of providing a beneficiary in a trust with a certain limited amount of funds from the trust each year. If the provision is adopted, the beneficiary can recover a certain amount of the trust’s total value each year, whichever amount is higher. This can give beneficiaries financial benefits without putting the entire trust amount in their taxable estate.

Q: How Can You Avoid Succession in Louisiana?

A: One of the most effective ways to avoid succession in Louisiana is to plan ahead and set up one or more trusts for the assets in your estate. By creating a trust, you ensure the assets put in the ownership of the trust pass directly to the trustee and beneficiaries after your passing and do not enter succession. There are other methods of transferring assets outside of succession, such as transfer-on-death designations. Trusts can impact more of your estate.

Q: What Is the Three-Year Rule in Estate Law in Louisiana?

A: The three-year rule in Louisiana refers to the ability to collate any gifts made by the deceased within the three years prior to their death. The state presumes that these gifts to heirs are advances on their inheritance and collates them so that the distribution of the estate is done equally between all heirs.

Q: What Are the Three Main Priorities You Want to Ensure With Your Estate Plan?

A: The priorities that you want to ensure with your estate plan will depend on your unique needs and wishes. Three common priorities include:

1. Outlining the assets you own, the debts you owe, and protecting your estate.
2. Providing inheritance for your loved ones, considering the needs of each heir, and limiting conflict between family members.
3. Ensuring that your own health, finances, and other affairs are taken care of if you are incapacitated.

Prepare an Estate Plan in Louisiana

One of the biggest mistakes people make in estate planning is failing to secure strong legal support. At Shelby Law Firm, we can help you create an estate plan that meets your needs. Contact us today.