Avoid This Estate Planning Mistake

A will or trust is critical to protect your estate after your passing, and to make a smooth transition of wealth to your intended heirs. That’s why it’s critical to keep it updated.

Take the story of Sarah: Her sister’s family lives in the Tel Aviv apartment her widowed father suggested should be sold upon his death. However, he died intestate, meaning he had no will, and the home was in his name alone. The sister and brother-in-law want to remain there, while Sarah wants to sell the property and evenly divide the profits between the siblings.

In Sarah’s case, if her father had left a will or a trust, it would have spared a family feud. As a Trust and Estate Practitioner (TEP), I deal with the financial planning side of wills and trusts. I do not give legal advice, but I see these kinds of problems regularly.

Who will manage the estate?

A will stipulates the beneficiaries and terms for leaving your property, and it usually appoints an executor, as well as a guardian for children. A will must be “probated” when someone dies, which means a court approves the document and the executor can begin to distribute assets.

A trust allows a grantor to put assets into the name of the trust, name a “trustee” who controls the assets, and name one or more “beneficiaries.” In Sarah’s case, her father could have placed the Tel Aviv apartment into a trust and then appointed a trustee to sell the property upon his death.

Who has control over the estate?

When an estate is handled by a will, an “executor” is in charge of distributing the assets. For assets in a trust, the trustee is in charge. The trustee must make decisions in the best interests of the beneficiaries.

Informing your heirs of your wishes before your death can help set realistic expectations. Otherwise, expect a court battle, or at the very least, hard feelings amongst your heirs.

To learn more about the conversation all parents should have with their adult children about their end-of-life wishes, click here.

Douglas Goldstein, CFP®, GFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

Published September 14, 2023.

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