It seems that everyone is talking about estate planning these days. After all, every day we are faced with the looming reality of our own mortality, so this is to be expected. However, even after one takes the prudent and smart steps to make an estate plan, there are pitfalls, and this week’s Alabama blog will focus on two, retitling and financial accounts, which can be costly and destroy one’s estate planning wishes.

The retitling pitfall

All assets in a trust must be retitled to name the trust as the owner. Otherwise, those assets are not part of the trust. This is why it is so important to retitle immediately and not wait. If one becomes incapacitated or dies before retitling has occurred, those assets not retitled or not in the trust, which means they will only pass after the probate legal proceedings, in addition to not avoid any taxes the trust was meant to avoid.

The financial accounting ownership pitfall

Even if one does not create a revocable living trust, every estate plan will include a will. Even the most basic wills split assets according to the drafter’s wishes, like an even split between children and family members. Of course, when one drafts their will, they mean to include their financial accounts, like bank accounts, investment accounts and retirement accounts. However, be mindful of who is named on these accounts because if another is named, that person will likely get the entire account, regardless of what the will states.

For example, if one’s retirement account already names one’s wife as the beneficiary if the owner dies, whatever the will states does not matter. That entire account will go to the wife. If a child is named as a joint owner on a bank account, then that child will get that account when one dies.

This can have real consequences. For example, if you have four children who are supposed to get equal shares, but one of the children get an entire bank account, that child will receive much more than the other children.

As one can imagine, these pitfalls can and do cause familial squabbles. No one wants to cause their family additional heartache after they die. The entire point of an estate plan is to avoid this, but be sure to speak with the Birmingham, Alabama, estate planning attorney to ensure these pitfalls, among others, can be avoided.