#1 You Left Someone Out and Didn’t Realize It
How could you have left someone out and not realize it? It’s
actually shockingly easy to make this mistake, and there are a lot of ways for
this to happen – even if the trust states the person’s name in it, that person
can still be accidentally disinherited!
Here’s some of the more common situations:
You forgot to provide for Fluffy and Fido
You leave everything to your spouse, but you have kids from
a previous marriage
You leave everything to your (grand)children, but your trust
defines that step-children are not children
#2 You Didn’t Fund Your Trust
So you paid all this money to set up a nice trust to protect
your assets and beneficiaries, but then you failed to put all of your assets
into it. It’s like having a really nice fireproof safe but you stack your important
papers next to the space heater instead. Maybe you got handed a book of
instructions and got overwhelmed. Maybe you thought someone else was going to
take care of it. Maybe you just didn’t realize that you had to fund a trust, not
just set one up! This is a common mistake.
You didn’t transfer
all of your original assets into the trust – you forgot, you didn’t know, etc.
You acquired a new or replacement asset down the line, but
didn’t put it in the name of the trust. For example, you got a new car, a new
house, or new financial account and don’t title it in the name of the trust or
TOD to the trust.
You misspelled the name of your trust on the asset
paperwork. If the asset is owned by or pays to a non-existent trust because you
messed up the name, then the asset is not controlled by the trust.
You revoked a previous trust but didn’t re-title the asset.
#3 You Assumed Your Paperwork Was Received & Enacted
You properly identified your assets to put into the trust, requested
the proper documents from your institution to change your beneficiaries, filled
it out properly and send it off to the required place. Done, right? Ha!
Many of the companies we deal with every day are notorious
for losing or failing to apply your beneficiary change documents. Our rule of
thumb is always: if you didn’t receive a confirmation from them, it never
The Post Office lost it in the mail. It happens.
The company lost the paperwork in their office, couldn’t
find your account, or applied it to the wrong account. This happens more often
than you think. We’ve heard them receive one piece of paperwork, but not the
other in the exact same envelope!
There was an error in the paperwork invalidating it, but
they never bothered to tell you about it. Maybe you missed a signature line,
wrote the wrong date, or signed your name differently than exactly it was
written on the account. This happens all the time!
#4 Your Forgot to SOAK Your Documents
You got your trust set up. You even put your assets properly
into it. But your successor trustee didn’t know about or could not find the
original documents. We use the SOAK method here: Are your important papers somewhere Safe from accidents, Original documents and not copies, Accessible to your
successor, and does your successor Know about them?
Safe – We’ve had house fires, coffee cups, and accidental
Originals –While electronic copies are great in many circumstances, estate planning often requires a full and complete original document. This especially includes having all parts of the document together, including amendments and schedules.
Accessible – you could stick your documents in a safe
deposit box or safe, but if your successor trustee doesn’t have authority at
the bank to access it, or the combination or key to open it, you are out of
Known – All the planning in the world is of no use if your successor
has no idea they are your successor, what assets the trust controls, and where
the documents are.
#5 You Didn’t Use A Professional
I love to DIY everything I can for cost savings and a
personal touch. Estate planning is not a suitable DIY area, though. It’s like using
WebMD to diagnose your symptoms instead of going to a real doctor. It is going
to save you a lot of time, money, and hassle to do it the right way, the first
time – even if that means you have to pay a professional their professional
We’ve had some real horror stories here. Just because you
found it on the internet or in a form book doesn’t mean that the form is
correct for you and meets the requirements of Missouri law. When you mess
something up with your estate plan documents, your assets don’t go where you
want them to, or they end up having to go through probate.
A grandmother left her grandchildren several bequests in her
will…but all of her assets were in her trust, so they had no effect.
The trust wasn’t notarized or witnessed
A pour-over will was missing an attestation clause, bond
A charity or organization was named but is no longer around
You paid money to a charity from post-tax
dollars instead of a qualified plan’s pretax dollars
It is easy to make a mistake in your trust which can have serious consequences. It might result in a little more trouble for your family, or it might completely mess up your whole estate plan. Double-check your documents now – you can still fix it!