– Hey, this is Toby Mathis. I’m an attorney with Anderson Law Group and Business Advisors and today we’re going to be talking about major mistakes to avoid
when estate planning. (upbeat music) Subscribe to the YouTube channel. Click the bell notification icon so you know when a new video’s uploaded. The tax laws are changing all the time, the laws are changing all the time, that’s why you’re first to
know, you’re first to grow. Things that you absolutely
want to make sure that you avoid like the plague because we’ve seen some
pretty nasty situations and I’m going to say right
up there is number one is doing nothing, doing the ostrich and sticking
your head in the sand. I’m sorry, Father Time wins out on all and it’s not just passing away. You’re going to leave a mess
behind if you pass with nothing but that’s rarely what happens. What usually happens is we get sick, or we’re not able to care for ourselves and we don’t have somebody designated, the next thing you know
you’re forcing your family to go and deal with state
workers and guardianships, conservators, all that fun stuff that nobody wants to deal with and you just put them into it. Number two is thinking that
you’re going to live forever. It’s not going to happen, nobody gets to take the U-haul
with them behind the hearse. So we’re going to have to do something and you really have three choices. You can either do kind of a simple will, in which case you’re going
to go through probate and you’re going to go through
a court-appointed process and that’s not you, it’s
actually going to be your heirs. You could do a living trust
where you avoid it entirely or you could just say forget it all and you die with nothing
and now you force your heirs to go through the probate process and you’re falling underneath state law and now they have to get
someone to figure out exactly what those are and
how to divvy things up. It gets really, really annoying
when you go through that and so I’m just going to
say please don’t do that. We have actually seen
litigation over items in low as, with values of less than five dollars. I am not joking. There’s a great case out of Georgia where they fought over a Tweety Bird. And I’m talking about
not a live Tweety Bird, I’m talking about a plastic, I tawt I taw a puddy tat Tweety Bird, a little plastic item. And the attorney even found a duplicate item, said to kids, hey, will toss both items
in there, we’ll shake it up, and you each get one. No, they both wanted mom’s Tweety Bird and they were willing to fight for it. In our offices, the worst case we’ve seen was $5,000 of litigation over some plates. It was the Christmas
plates and it was one day, it was emotion and they had
to sit down with attorneys and divvy these things up. Avoid it like the plague
by putting it in writing. Please! And you could do that,
realistically, the best way is by doing a living trust. It’s going to encompass everything. Or at least a living trust,
I mean, at least a will with other ancillary items
like a schedule of gifts. Just making sure that you’re
specifying who gets what. This is very key because if you add grief and money you’re
going to have conflict. When you have your kids left behind or even if it’s a spouse,
sometimes it’s a second marriage with first kids, it’s just
a recipe for disaster. What we have seen is that
more likely than not, if there’s going to be a fight, it’s going to occur when somebody passes and in the probate setting. We all have our stories,
we have tons of them. It’s more likely than not
that that’s when the, pow, the conflict’s going to happen. On the flip side, it’s
more likely than not you will not have issues
if you simply document it and use a comprehensive estate
plan like a living trust. They are also considerably less expensive than that alternative. Last but not least, avoid doing nothing, absolutely avoid doing nothing. Third biggest mistake we see is somebody will document
things and not actually update. They’ll create a will,
forget they have it, life moves on, things change, and they accidentally
disinherit their kids or some other event
where they didn’t foresee that by not changing a document or by not updating things, that it could have unintended consequences and I’ll give you an example. This actually happened in my family where an aunt took care of
one of our elder relatives. Everybody said great, we’re going to leave everything
in the house to that aunt. We’re going to, and we’re
talking about the house and its, everything in it, because
it was all family heirlooms. Everybody knew, they were like, hey, if something ever happens, we’re going to end up figuring
and divvying things out. It was all going to this aunt
and then she got married. Being what a lot of us do,
we just simply do a will, we don’t think about the fact
that we might be cutting off a section of our family. What happened there is she
predeceased her husband. Her husband was not a
member of our family, right, like by marriage only. But he had his own kids,
he had his own family. Everything transferred to him. When he passed, everything
went to his kids. The entire side of the family was cut off. We see this happening over and over again because well-intentioned
people don’t realize that simply distributing
items may not be sufficient. I might want to hold
items and allow somebody to get the benefit of it,
and that’s called a trust, and then go to my heirs. Especially in this day and
age where we see Brady Bunches or people getting married
again later on in life where they already have kids and family. Unfortunately, the cookie
cutter approach of doing a will, or if you’re doing nothing
and you let yourself fall under the laws of the
state in which you’re residing, more often than not, you’re disinheriting a
section of your family and it’s going to go some
place that you never intended. That’s why it’s so important
to make sure that you actually document these things out
and you work with somebody who understands what your options are in how to avoid those common pitfalls. Last thing, last thing I’ll get, and I’ll say it’s another huge mistake is we are focused like a laser beam solely on our own mortality
and not on everything else that we have to offer. In other words, we look
at ourselves and we think, when I pass, I’m just going
to distribute things out and you’re not thinking
of the long picture. Here’s a stat to wake you up. If you give somebody a windfall, if you give them assets
that they didn’t work for, statistically speaking,
this is according to studies done by Duke and Ohio State, they’ll have approximately
16% of that asset after five years. So if you are of a means
and you leave assets to somebody who’s not
prepared to handle it, you may have just cursed them. The stats also show that
folks that get windfalls, especially lottery winners, the bankruptcy rate
escalates exponentially. It literally goes up from,
I think, it’s less than 1% in the regular population to over 30% with some estimates being as high as 70%. Although I’ve never seen
that backed up with numbers, I think the real number
is probably less than 1/3 but is significantly higher than their non-windfall counterparts and so we don’t want to
curse our family members that we’re leaving behind or
anybody, even organizations. We don’t want to curse them
if they’re not prepared to handle that asset. When you look at yourself, look at yourself as a continuation. I tell people to do a
200- or 300-year plan, put something in place that benefits. For example, if you care about education, don’t give the money to
your kids, put it in trusts and make it an education trust
that’s for your descendants, so your kids’ kids, your grandkids, your great great grandkids, your great great great great grandkids. It just keeps going on and
it’s there with specific rules for how those monies are allocated but it’s done for education, if that’s what you think is important. You could just plug in the blank. I think that blank is really
important and, therefore, I’m going to create
something to foster that amongst my descendants. Or it could be organizations
that you care about. I use a great example. Quite often in philanthropy, you probably, you probably never heard of it, but it’s the Hershey Foundation. It still educates over 2,000 kids a year, it has a funeral home,
cemetery, a hospital, a museum, all things in
Lancaster County started in 1905. Milton Hershey and his
wife had no children. These things continue on after you if you decide to put them in motion and I think that’s the
most important thing is to look at and say
you have the opportunity to affect lives for
decades, if not centuries, after you are gone if
you put things in place. Before you say, and I always get this, I’m not a rich person. It doesn’t matter. You can put things in place. For example, we all have a body, right? I can insure this thing,
I can turn it into money if I pass away. If you have insurance or other things, it can fund your plan. Don’t let anybody tell you that you that you don’t have enough
money to put together a plan because you absolutely do. What you shouldn’t do is not have a plan. We’ve seen examples of this in the papers over and over again where you have these highfalutin stars who have
the best lawyers on the planet and they still manage to do nothing because they think they’re
going to live forever or that it’s not a problem or they listen to some lawyer who says all you need is a simple
will and don’t worry, the probates aren’t that bad. For whom? Maybe for them but for your family, pretty much tell you it’s highly likely that it’s going to suck really bad. Avoid it if you can possibly do it and it’s very easy to do it. In fact, it’ll put a lot
more money into your family’s or whatever organization you care about, into their pockets in the long run because you’re going to
avoid a lot of legal fees and a lot of needless expenses by doing one simple thing and that’s putting a plan in place. I hope this is helpful and that
you’ve learned a little bit about what type of
planning mistakes to avoid. (upbeat music)