Tsk, tsk…you are not a lone wolf. You should not be doing estate planning on your own. Unfortunately, it is not a do-it-yourself project. One of the less glamorous truths of the legal profession is that attorneys often earn their living correcting costly mistakes. In fact, after more than 15 years of encountering nearly every estate planning error imaginable, we decided to put that experience to good use by sharing some of the most common pitfalls with our readers. After all, helping people avoid unnecessary trouble is what good lawyers are supposed to do.
Mistake Number 1: Adding Your Adult Children to the Title of Your Home
A common estate planning mistake occurs when parents decide to add an adult child as a co-owner of the family home or apartment in the hope of making the eventual transfer of ownership simpler after their passing. While the intention is understandable, the legal and financial consequences are often overlooked. So, why is this bad you ask?
- By adding your child to the title, you are exposing the property to your child’s current and future financial liabilities. If your child is sued or incurs significant debt (like credit card or medical debt), creditors may be able to pursue claims against YOUR property.
- Your child’s spouse acquires legal rights to the property in the event of their divorce or your child’s death, even if the spouse’s name is not explicitly written on the title to the home.
- There may be unintended property tax consequences. Changes in ownership can affect homestead exemptions, particularly when the property is not your child’s primary residence. In many cases, families only discover the issue after receiving a substantially higher property tax bill (usually with zero warning – you just get the bill in the mail).
Mistake Number 2: Adding Your Minor Children as Beneficiaries on Your Financial Accounts
Come on, you are smarter than this. Yet we often see this well-intentioned decision that creates unnecessary and highly complex legal problems. A common example is a grandparent naming a young grandchild as the direct beneficiary of a life insurance policy or financial account. On paper, it may seem simple enough: Grandma leaves a $100,000 life insurance policy to beloved eight-year-old Isabela. In reality, Florida law has other plans.
Under Florida Statute 744.387, a court-supervised guardianship is generally required when a minor child inherits more than $15,000 directly. In practical terms, this means that a child cannot simply receive and manage inherited funds (through a natural parent) acting informally on the child’s behalf. Instead, the court must appoint a legal guardian to oversee the funds until the child reaches adulthood.
The result is often a lengthy and expensive court process. The inherited funds become subject to ongoing judicial supervision, and access to the money typically requires court approval. Families are also responsible for the legal fees and administrative costs associated with establishing and maintaining the guardianship until the child turns 18.
- The work-around: Grandma should have set up a trust, and listed that trust as the beneficiary instead. A properly drafted trust can allow assets to be managed privately according to Grandma’s wishes – without unnecessary court involvement.
Mistake Number 3: Not Adding Any Beneficiaries to Your Financial Accounts
Remember – you are not a lone wolf? You spent your whole life saving from your paycheck, refinancing homes, taking on debt, paying down debt, contributing to retirement accounts, and carefully setting aside money for the future. Naturally, the goal is usually to leave those assets to family members or other loved ones upon your death. Surprisingly, many people fail to designate beneficiaries on their financial accounts, unintentionally allowing Florida law to decide who ultimately receives those funds.
In Florida, if you die without naming beneficiaries on a bank account, the account usually becomes part of your probate estate. If you also die without a Last Will and Testament (“Will”), Florida’s intestate succession laws determine who inherits the assets. Typically, distributions are made first to a surviving spouse, then to children, and then to other relatives according to a strict statutory order. The probate process itself can create delays, increase administrative expenses, and make access to funds more difficult for surviving family members.
- The lesson here is relatively simple: review your beneficiary designations and make sure the appropriate person is listed (should be adults and not minors). Otherwise, the distribution of your life’s savings may be determined by default legal rules rather than your own intentions. Even Uncle Fester is a better choice of beneficiary than Uncle Sam.
Mistake Number 4: Not Telling Your Family Where You Bank
One of the most common questions that arises during probate consultations is: “How do we find out where our loved one held their bank accounts?” Unfortunately, there is rarely an easy answer. Contrary to popular belief, there is no centralized database that allows families to search for every financial institution where a deceased person maintained accounts.
As a result, families are often left piecing together financial information by rummaging through old mail, account statements, tax documents, and online records. While the process may sound surprisingly informal, it is often the most practical method available unless a formal probate proceeding is opened and a court-appointed Personal Representative begins cold-calling the local banks one by one.
- Simple solution: Maintaining a simple folder containing recent statements from each financial institution can save surviving family members considerable time, expense, and frustration. The folder should be kept in a desk, drawer, or shelf that trusted family members can reasonably access. Importantly, avoid placing this information in a locked safe or safe deposit box at a bank that no one else can open.
Mistake Number 5: Not Planning for Incapacity
Most people associate estate planning with what happens after death. In reality, the most important documents are the ones that protect you while you are still very much alive – just ill and temporarily unable to manage your own affairs.
Without a durable power of attorney, healthcare surrogate designation, and living will, your family may find themselves asking a judge for permission to handle basic matters on your behalf. And unfortunately, banks, hospitals, and financial institutions are not particularly moved by statements such as, “But I’m the spouse,” or “I’m the oldest child.” They generally prefer actual legal documents.
This often leads families into a court-supervised guardianship proceeding, which is rarely anyone’s idea of an enjoyable family activity. The process is an expensive, time-consuming, and emotionally draining nightmare, particularly during an already stressful medical situation.
Proper incapacity planning allows trusted individuals to step in quickly and handle financial and medical decisions without unnecessary court involvement.
- In other words, a few relatively simple signed documents today can help your family avoid the future need to hire a guardianship attorney.
The good news is that Natasha Chipiga and Fernando Orrego of OC Estate and Elder Law are here to help. All of these mistakes are common, predictable, and completely fixable with a little planning and the right guidance. So, before you start adding anyone to any Deeds, financial accounts, or “creative” online forms, give us a call at (954) 251-0332 or email us at info@ocestatelawyers.com. Our law firm conducts consultations over the phone or by Zoom. The even better news is that your family will likely thank you.
