How to avoid common mistakes so your aging parents are legally protected.
When you make a legal mistake in estate planning, it can be costly. Or your desires aren’t executed in the way you thought they would be. Often times, if you wait too long, it’s too late. What are some of the biggest mistakes to avoid?
Jeff Barnett and Keith Leuty are lawyers with partnering sponsor Barnett & Leuty, PC. They talk with Kim and Mike Barnes of Parenting Aging Parents to explain some of the problems, like waiting too long, trying to do it yourself, getting bad information from friends or relatives, not understanding the documents you’re reading or thinking you’re saving money now that could cost you way more later.
Read the full transcript
Transcript of Interview: “Biggest Mistakes Made in Estate Planning”
Mike Barnes:
I know a lot of us have seen, maybe the hard way, that when you make a legal mistake, it really bites you.
Kim Barnes:
Absolutely, it’s too late to fix things or it gets really costly. So today, we’re bringing in Jeff Barnett and Keith Leuty of Barnett and Leuty Law Firm. Thanks so much for being here. We’re going to talk about the biggest legal mistakes that people make when it comes to estate planning. I think one of the things that we see pretty often is people who will ask the question, “Hey, Mom’s got dementia, she’s 80, and we don’t have a will. What should we do?” There is a point at which it’s too late to take action.
Jeff Barnett:
Yeah, absolutely. One of the biggest problems that people have is that they just wait too late. It doesn’t have to be, obviously, the example that you gave, that’s a great one and it happens all the time for sure. But people always think they’ve got more time. We make this point a lot to everyone that we talk to, whether it’s seminars, social media, or whatever. Nobody knows what tomorrow will bring. Nobody knows if tomorrow is your last day. If tomorrow is your last day, you need to be ready, regardless of whether you’re 25, 35, or 85. You need to have your documents in line, so it’s very important not to wait.
Keith Leuty:
When is the right time to make a will? I have two answers: one is yesterday, and the next one is if you can tell me the date that you’re going to die, we’ll back it up at least two weeks so that we have time to draft and you have time to sign. Everybody is on a road headed toward a cliff. If you’re not prepared for that, you’re in for quite a shock. Usually, when people come in, the first thing we talk about is what legal documents they already have in place. By getting at least your basic legal documents done, you can pave the road a little bit, get rid of those potholes and those unexpected twists and turns, so that whatever happens, it should be a lot smoother for both you and your loved ones.
Mike Barnes:
Am I right in saying that there’s basically nothing you can do too early? There may be something where I get more money or have more property and have to update it, but otherwise, go ahead and get it done?
Jeff Barnett:
Oh, absolutely. As far as the basic five documents that we’ve talked about a lot, there’s absolutely no time that’s too early. Other than before 18—you couldn’t do it before you’re 18—but there’s no problem having it that early. If something happens to you medically or financially and you end up with some money, if you’ve already got the documents in place, you’re already set.
Kim Barnes:
But the biggest problem is that you have probate, and you have adult children who may not be able to make decisions and help their parent if you don’t have these documents. Maybe let’s just go over real quick those five legal documents starting with the will and powers of attorney.
Jeff Barnett:
Sure. The basic five are the will, the medical power of attorney, the durable power of attorney (which is for financial, property, and legal matters), a directive to physicians (also known as a living will or advanced directive), and an appointment of agent to control the disposition of bodily remains.
Kim Barnes:
You brought up the point about somebody who maybe doesn’t think they have that much money or much to leave behind, and potentially even a couple who thinks, “Even if we have a lot of money, it’s just going to go straight to my husband.” Is that often a mistake that people make thinking that they don’t really need a will because it’s just going to go straight to their heirs?
Keith Leuty:
That belief falls under the category of true but not accurate. A lot of times people do have things set up pre-probate, like money in a bank account with named beneficiaries. There are a lot of ways that you can make mistakes or think you have one thing when in fact you don’t. A will is at least a safety net. You never know until somebody passes away and we sit down and evaluate their estate whether or not they really need to go through probate. There’s a huge difference between going through with a will and going through without. With a properly drafted will, there’s predictability in terms of time, cost, and outcome. Without a properly drafted will, you lose all that predictability.
Mike Barnes:
Kim and I love to tell the story that we didn’t have wills for each other until we were about 30 when our first child was born. Even then, we did a floppy disk will. When you do a DIY-type will or power of attorney, it can get you in trouble, is that correct?
Keith Leuty:
Yeah, we see quite a bit of that. That question comes up a lot with everyone wanting to do it themselves. The thing is, if you don’t know what you’re doing, you’re going to wind up making mistakes. I’ve looked at some of the documents that have come off the do-it-yourself websites and they tend to not be state-specific. They tend to be very generic for a nationwide audience. Even if you maneuver through and make the right choices, you may still end up in probate court jumping through extra hoops, which means more time and more money to try to fit a square peg into a round hole.:
The bigger problem is that if you don’t have a background in knowing what should or shouldn’t be in the document, you can create a lot of problems for yourself. It’s a little bit like auto mechanics. Anyone can take a wrench and start unscrewing and screwing things in, but to get the desired outcome, you need someone who does this for a living.
Jeff Barnett:
The two most expensive, most complicated, and longest probates I’ve ever handled for a client resulted from DIY situations. In both cases, the person either did it themselves or had a non-lawyer family member help them. One was a form; one was typewritten. Both were missing critical information. Instead of a smooth, easy, straight path, they ended up having to go through two parallel tracks of probate and pay for both. It was a lot of extra work, more expensive, and more complicated. DIY is absolutely the worst way to go.
Kim Barnes:
What if I want to save a little money and start with the DIY, then have an attorney look at it?
Keith Leuty:
That question comes up quite a bit as well. People think they’ll save money by doing that, but it’s quite the opposite. If you go to an attorney, we have sophisticated software that’s updated regularly. We know what comes out will be acceptable because we’ve tested it. If someone brings us a document they drafted elsewhere and asks us to review it point by point, it will take a lot of time and end up costing more. It’s easier for us to start from the beginning.
Jeff Barnett:
If they’ve brought us something that needs to be redone, they’ve paid someone for a form, paid for our review, and will end up paying us for documents either to be overhauled or done with our professional software. It ends up being more expensive and complicated.
Kim Barnes:
What’s a holographic will?
Jeff Barnett:
A holographic will is a will written entirely in your own handwriting. It’s not a will you draft yourself and type up; it must be completely handwritten. It has the same pitfalls as any form or situation where someone not an attorney drafts it. They don’t know what to add or exclude and end up with a document that could be the worst of all scenarios.
Keith Leuty:
A holographic will is like someone trapped on a desert island, scribbling on a leaf to leave their estate to their wife. It doesn’t have any complexities, and you end up jumping through a lot of hoops to get it through probate.
Jeff Barnett:
If you’re about to die and have nothing but a piece of paper and a pen, it potentially is better than literally nothing. But it could be more complicated. It’s an expression of your wishes that, if your handwriting can be proven, could end up with the result you want. It may just be more complicated to get there.
Kim Barnes:
Is another big mistake that people crowdsource information or ask their friends who are not attorneys for advice?
Keith Leuty:
A little bit. I don’t see that quite as much, but people do walk next door and try to get legal advice from their neighbor who isn’t an attorney, or someone on a Facebook group saying, “You don’t need that.” Make sure you’re talking to an expert and getting the right information.
Kim Barnes:
Can there be mistakes made with powers of attorney, especially with having co-agents or too many? What are the biggest mistakes made with powers of attorney?
Keith Leuty:
People come in and say, “I want to name somebody to be my co-agent.” I’ve got two kids I want to be co-agents. I tell them, “If you needed a ride to the store, would you ask both of your children simultaneously to drive you?” That’s going to create an accident. You want to choose one person you trust the most and name the others as backup. The idea of co-agents is usually not a good one. Most of the time, we can talk them out of it. Occasionally, I’ve threatened to get up on the table and stomp my feet, but it hasn’t come to that.
Kim Barnes:
Something to consider and talk to you attorney about because with cos, two or three it could get really complicated because everyone has to be in place to make decisions. Correct?
Keith Leuty:
If you have co-agents and they all have to sign equally, you’re rounding up a whole bunch of signatures. The worst case is when they come in and say, “I’ve got three kids, they’re co-agents, and they can all act independently.” Now you’ve got sibling number one doing something, sibling number two undoing it, and sibling number three doing something completely different. It’s like watching The Three Stooges.
Kim Barnes:
Proximity makes a difference depending on where your kids are located and where you are, right?
Jeff Barnett:
To some degree. Legally, there’s no difference. Someone living in another country could be an agent, but it’s harder. If you have two people you trust equally, proximity can be a deciding factor. But if the best person lives far away, pick the best person. Things can be done by video conference, DocuSign, and remotely. Don’t be penny wise and pound foolish. DIY or non-lawyer advice almost always results in a worse outcome. It’s better to go through a qualified attorney. It’s an investment well worth it.
Keith Leuty:
Make sure the attorney spends time with you. Ask questions to understand what the documents do and how they work. Don’t rush. Understand how they work. For example, a springing durable power of attorney doesn’t activate unless a doctor signs off. People try to act with a durable power of attorney that hasn’t been activated yet, which complicates things.
Mike Barnes:
Jeff Barnett, Keith Leuty, great advice as always. Thanks so much.
Jeff Barnett:
Thank you.
Keith Leuty:
Pleasure.
Jeff Barnett:
Thank you for having us.
Mike Barnes:
As always, what we’ve learned here is that you have to trust the experts, in this case, the attorneys. They know what they’re doing, and if you don’t, it will make things a mess.
Kim Barnes:
Do it before you need it, because if you wait too long, it’s too late.
Mike Barnes:
If you have any other topics you’d like us to discuss, please let us know. Parenting Aging Parents.
*This transcript is auto-generated. Please excuse any typos or mistakes.
