Estate planning is the process of preparing your assets for death and possible incapacity. It also includes planning for estate taxes. The primary tool used for estate planning is the revocable living trust. This is supplemented with a will, financial powers of attorney, and health care directives. While these documents are important, document preparation firms have turned the documents into standardized templates. In order to cut costs, an estate planning attorney can be guilty of falling into this trap of producing cookie-cutter documents.
Meanwhile, these templates used to protect your family are not keeping up with changes in the law and changes in society. In order for the preparers of these templates to work, they presuppose a perfect world in which the laws do not change, you don’t change and society doesn’t change. But, the minute there is a change, these documents may no longer protect you. A few examples will help.
Living Trusts and Remarriage
If you are married with children, it is likely that the templates used will assume that your spouse won’t get remarried if you die. If you die and your spouse does remarry, your plan is normally defenseless against the new spouse despite what your plan states. When your spouse does die, their new spouse is the likely recipient of the assets, thus leaving your children in the cold. An estate planning attorney should have told you the truth.
Living Trusts and Incapacity
Living Trust templates are designed to avoid probate because that was the concern that started the living trust craze in the 1970s. However, with the miracles of modern medicine, you are 6-times more likely to become incapacitated this year than you are to die. Living trust templates have not kept up with the complexities. The estate planning attorney is not going to take responsibility for your outdated documents. For example, what little incapacity provisions are included rely on the death provisions of the trust. Without more clarity, if you become incapacitated a guardianship is more likely than with customized planning.
Living Trusts and Law Changes
Living trusts templates are not dynamic. If the law changes, your documents are immediately outdated. To keep them current, you need an architect who understands (1) that the law changed, (2) how that change affects your plan and (3) how to effectively update your documents to reflect the law changes. For example, the tax law has dramatically changed over the last few years. Married couples that don’t modify their documents face significant fees and administrative burdens when one of the spouse dies.
These issues could have been avoided by hiring a local Las Vegas estate planning attorney that understands the problems with traditional estate planning.