Sidney Wheelan: [00:00:00] Welcome to Law Days and Lattes. The podcast where we blend the world of law and business with a warm cup of information and common sense. I'm your host, Sidney Wheelan, attorney, real estate investor, and business owner. Each week, we'll be your go to source for legal insights, business advice, and so much more.

Whether you're a seasoned professional, an ambitious entrepreneur, or simply someone seeking guidance, we'll have you covered. From navigating the legal landscape to empowering you with valuable business strategies, we'll explore the legal side of life and enjoy a virtual latte along the way. So, grab your favorite [00:01:00] latte, get comfortable, and let's dive into Law Days and Lattes.

Welcome back to Law Days and Lattes, where we break down the legal side of life over a cup of coffee. I'm Sidney Wheelan, your host and founder of the Wheelan Law Firm of Moberly, Missouri, your go to source for legal issues facing your family and your businesses.

Today, we're tackling a critical topic. Why estate plans fail and more importantly, how to make sure yours doesn't. Many people create a will or a trust thinking they've done everything right, but the truth is that estate planning isn't just about having the documents. [00:02:00] It's about ensuring that your wishes are actually carried out.

Did you know that only about a third of Americans have an estate plan in place? And even fewer updated on a regular basis. That means a lot of people are at risk of their wishes not being followed, their assets going through probate, or their families dealing with unnecessary legal battles. So, grab your latte, and let's dive into the biggest estate planning mistakes that people make, and how you can avoid them.

First, let's start with a big one. People who set up a trust, but forget to transfer their assets into it. If your assets aren't properly titled into the trust name, they still have to go through probate. Take Whitney Houston, for example. It's been reported that she had set up a trust for her daughter, Bobbie Christina Brown, but because many of her assets weren't [00:03:00] properly transferred into the trust, they ended up going through probate anyway.

The result? A long legal process that could have been avoided. And it's not just the rich and famous that we sometimes hear about. It's everyday people like you and me who think that they're doing the right thing. After all They've thought about it and even taken the next steps by contacting an attorney and having the documents drafted.

But, they failed to take the final steps to get their assets into the trust. So, how do we fix it? Well, if you create a trust, make sure your real estate, your bank accounts, and your investment accounts are actually titled into the trust's name. Your lawyer can help with some of this. If you own real estate, you need to deed the property from your name to the trustee of your trust and make sure that the deed is properly recorded.

In Missouri, the deeds are filed [00:04:00] and recorded in the Recorder of Deeds Office in the county where the property is located. If you have property in more than one county or more than one state, you will have to create and record more than one deed. You will have to take your certification of trust document to your bank or other financial institutions and properly retitle your accounts into the trust name if you want those accounts protected by the trust.

Same thing goes for your titles to your motor vehicles. Take the certification of trust. to the License Bureau to make sure that your vehicles will be protected by the trust. If you don't have a Certification of Trust document, please contact your attorney to have one created for you. The second thing I want to talk to you about is outdated beneficiary designations.

This is another common mistake, forgetting to update your [00:05:00] beneficiary designations on your life insurance policies, your retirement accounts, and your bank accounts. Another real life case, Warren Berger, former Chief Justice of the U. S. Supreme Court. It's reported that he wrote his own will, a very short one, and failed to include clear beneficiary designations.

As a result, his family ended up paying over $450,000 in unnecessary taxes and legal fees. Even worse, in another case, Kennedy versus plan administrator for DuPont, a man's retirement benefits went to his ex wife. Not something most of us want, because he never updated his beneficiary form on his life insurance or his retirement accounts, even though his will stated his daughter should inherit the money.

The Supreme Court ruled that the beneficiary designations override the wills. This is true in Missouri as well. So, how [00:06:00] do we fix it? Review your beneficiaries at least once a year and update them after any major life events, like marriage, divorce, or even the birth of a child or a grandchild. Remember, if your beneficiaries die before you do, your life insurance or other accounts may have to go through probate.

To avoid this, make sure that your trust is named as a beneficiary or a contingent beneficiary on those policies or those accounts. The next topic I want to talk to you about goes into the category of do it yourself documents, especially wills or other poorly drafted documents. Oh, the trouble we cause when we think we can prepare these documents ourselves without the benefit of real legal advice.

A lot of people think that they can write their own will, but the risk of errors is high and legal battles [00:07:00] that arise later are fatal. far more costly than the original cost of a properly drafted will. Even the famous are not immune to this error. Take Aretha Franklin for instance. It is reported that after she passed, multiple handwritten wills were found.

One in a couch cushion. Because her documents were unclear and inconsistent, her family ended up in court fighting over her estate. So the best way to fix this problem? Don't do it yourself. Work with an attorney to draft a clear, legally binding will that follows your state laws. Next, I want to talk to you a little bit about tax.

People often think estate taxes apply to the ultra wealthy. But poor planning can still create tax burdens even if you're not so wealthy. For example, and I'm probably going to mispronounce his name, but James Gandolfini, [00:08:00] star of The Sopranos, left 80 percent of his estate to his family. But without proper tax planning, this resulted in a 30 million tax bill.

Now, hopefully, your heirs won't end up owing 30 million to Uncle Sam, but how do you ensure that your heirs won't end up with a big tax bill anyway? Consider tax efficient strategies like trusts, charitable giving, and gifting assets during your lifetime to reduce estate taxes. And, if you're unsure about how much of an issue taxes may be for your heirs, talk to an accountant or your estate planning attorney about your unique situation.

Properly drafted documents can often eliminate capital gain taxes altogether. And, depending upon the size of your estate, estate taxes may not be an issue. Did you know that estate planning isn't just about death? [00:09:00] It's also about what happens if you become incapacitated. Terry Shiavo is a well known case.

She was an American woman who went into an irreversible, persistent vegetative state after collapsing due to a cardiac arrest, a heart attack, which cut oxygen supply to her brain. She remained in a coma for 15 years, while her family battled over her life support decisions. In another case, this one closer to home in Missouri, Nancy Kurzan suffered severe injuries in an automobile collision, leaving her with no significant cognitive function.

Because she did not have an advanced health care directive in place, the courts originally did not allow her family the chance to remove her from the life support. Her family fought all the way to the U. S. Supreme Court. If she had had a living will or a health care [00:10:00] directive, that fight might have been avoided.

This particular case led to more routine uses of health care directives and durable medical powers of attorney in Missouri. So, the lesson here is to always have a durable health care power of attorney with a health care directive in place so that your wishes are known if you can't make the decision yourself.

Now I want to switch gears a little bit and talk about business succession planning. If you're a business owner, what happens to your business when you're gone? Without estate planning for your business, your business interests could be tied up in legal disputes for months or even years with your heirs fighting over who should have control.

How to fix this? Well, if you own a business, create a succession plan that clearly states who will take over and how your business assets will be [00:11:00] distributed. And if you have business partners, a clearly drafted business agreement, including buy sell agreements, is imperative if a partner becomes incapacitated or dies.

So, how can you prevent these common mistakes? Here's a quick checklist. First, work with professionals. Attorneys, accountants, and financial planners can help. Two, update your plan on a regular basis. Some say review it every two to three years, or even sooner if you have major life events. Three, if you have a trust, make sure it's funded.

Make sure your assets are properly titled so that your assets are protected by your trust. Four, make sure your beneficiaries are in line. Don't let outdated beneficiary forms send assets to the wrong person. Remember the ex spouse that we talked about [00:12:00] earlier? Next, plan for incapacity. Have a health care directive and a durable power of attorney for health care in place.

And finally, communicate with your family. Let them know your wishes. This goes a long way to avoid future disputes. And while we're talking about it, don't forget about your digital assets. Many people now have cryptocurrency, social media accounts, or online businesses that should also be included in their estate plan.

This wraps up this episode of Law Days and Lattes. If you have questions, send them my way. I'd love to address them in future episodes. And if you found this episode helpful, please share it with a friend or leave a review. Next time, we'll talk about the legal side of wealth building, estate planning for entrepreneurs.

So, stay tuned! Until then, my friends, [00:13:00] grab your favorite latte, hold your loved ones tight, and have a great week.

Disclaimer: This podcast episode contains general information for discussion purposes only. Each case is different and must be judged on its own merits. Missouri rules generally prohibit lawyers from advertising that they specialize in particular areas of the law. This show should not be construed to suggest such specialization.

Nothing on this show should be taken as legal advice for any individual case or situation. This information is not intended to create an attorney client relationship, and the listening or viewing of this podcast does not constitute an attorney client relationship. The choice of a lawyer is an important decision and should not be based solely upon [00:14:00] advertisements.