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Avoiding common estate planning mistakes

There are several common mistakes people in Michigan would do well to avoid regarding estate planning. Some of the mistakes may be corrected if they have already been made, but it's best to fix any problem as soon as possible so it does not become too late.

A common error is failing to plan at all and believing the state will handle passing the estate's proceeds to heirs. While the state does have intestacy laws, leaving it all up in the hands of the state may eat up a significant portion of the held assets in expensive public probate litigation. Another common problem is when people set up a revocable trust, many fail to go ahead and fund it. The trust only exists to protect the assets it holds. If it is not funded, it is not effective.

Along those lines, some people set up trusts and write wills, never to revisit either document. Life circumstances change, and the documents governing the estate should be updated accordingly. People also fail to review life insurance plans, retirement plans and other accounts that do not pass according to the will or trust documents. Reviewing those policies and accounts is important to ensure the intended beneficiaries of them are correctly listed.

Some people attempt a DIY trust, which is generally not a good idea as mistakes can lead to later battles and a potentially lengthy probate process.

There are many errors that people may make when planning their estate, drafting documents and establishing trusts. Because errors may lead to significant costs later on, it is often a good idea for people to seek the advice of an estate planning attorney. After a trust has been established, reviewing the estate's assets and the trust documents with the attorney may be a good idea as well.

Source: CNBC, "Trust bust: Steer clear of the 8 biggest estate-planning mistakes", Barry Glassman, January 03, 2015

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