There are a number of mistakes one can make in financial gifting and distributing assets among heirs. Being aware of the most common problems and addressing them in creating your estate plan can make for a smoother transition of assets.

Timing your gift to you heirs can be very important. If you leave money to a young person, as I’ve written before, you don’t want to give too soon. Financial maturity does not necessarily coincide with age.

But, if you give too late, or neglect telling your heirs of their forthcoming inheritance, you put them at a financial disadvantage. Inheriting sooner through lifetime gifting, or having knowledge of a planned inheritance might change their financial decisions or present to them opportunities that otherwise might pass by.

When you do give, you also need to consider the amount you’re giving. Giving too much may do your heirs more harm than good. There are tax benefits as well as life lessons you may pass on by sharing the wealth among other beneficiaries or by giving to charity.

If you’re planning to leave unequal amounts to your children, proceed with caution. Unequal inheritances – even where one child is more prosperous than another – can create animosity between siblings that may last through their lifetimes and future generations.

However, in an attempt to prevent these problems, you also don’t want to put in place so many controls that you stifle your heirs and the control they have over their inheritance. A trust can be structured with controls and incentives, though, that can help eliminate many of the previously mentioned problems.

Make sure you’re getting good estate planning advice from an estate planning attorney or financial planner, and avoid these common pitfalls.

James D. Perry

With wills and trusts, people tend to “set it and forget it.” But it’s important to revisit your will and trust documents at least every five years, or whenever there is a major life event – new children, new son or daughter in law, new grandchildren, divorce, remarriage, new property, etc.

Guardianship appointments should be current if you have minor children so that you can designate who will care for them if you die.

Your beneficiary designation forms determines who will get your insurance and retirement accounts. This too, should be updated periodically. If you named a sibling or your parents as your beneficiary when you were younger on these forms, you might now want to make sure they go to your spouse or children instead. Many people aren’t aware that these forms override stated wishes in your will so you should consider these documents in tandem to prevent confusion.

Keep all these documents in a safe place – a fire-proof safe, a clearly marked file in your file cabinet, a shared folder on your home computer, or ask your lawyer to hold on to them – and make sure your loved ones know where they can find them if and when they need them.

In a medical emergency, or in moments of mourning, you will not want your family and friends to be in a frenzy when all they want is to honor your wishes and your memory.

If you haven’t started any of these documents, you should immediately create a balance sheet that lists the basic information about your assets and schedule an appointment with your estate-planning attorney as soon as possible.

James D. Perry

At the end of May, parties claiming deceptive business practices by LegalZoom filed a class action lawsuit in California against the online legal document preparation service. They argue that LegalZoom’s advertisements give consumers “a false sense of security that people do not need hire a traditional attorney.”

In July 2007, Anthony Ferrentino asked his niece, Katherine Webster, to help him use LegalZoom to prepare a will and living trust. But, when Katherine went to transfer her uncle’s assets into the trust, she found that the financial institutions that held his money refused to recognize the LegalZoom documents as valid. Katherine tried to get help from LegalZoom’s customer service representatives to no avail, and the trust was still not funded when Anthony died in November 2007.

Katherine is now one of the plaintiffs in the suit against LegalZoom suing on behalf of herself and on behalf of anyone in California who paid LegalZoom for a living trust, will, advance directive for health care, or power of attorney.

The internet has brought a lot of convenience to our lives with its wealth of information, online shopping, and the ease of staying connected to our loved ones. But sometimes convenience means cutting corners, and the one area you don’t want to cut corners is in protecting your loved ones and your property.

These legal document preparation services are not the same as going to an actual attorney, but they do not clarify that in their user agreements. And, customer service representatives may look over your documents, but they cannot dispense legal advice, identifying problem areas or correcting mistakes. The documents are customized with your personal information, but they are not tailored to your needs.

After her uncle’s death, Katherine hired an estate planning attorney to petition the court to allow the post-death funding of the trust and to convince the banks to transfer the funds. The attorney also discovered that Anthony’s will was never properly witnessed.

Correcting the mistakes ended up costing Anthony’s estate thousands of dollars. Doing it right the first time would have saved time and money, and a lot of emotional stress. In the end, the “convenience” simply wasn’t worth it.

James D. Perry