You don’t want poor estate documents to cut your loved ones out of inheritances. There’s rarely a “do over” in estate planning. Click through to avoid mistakes people tend to make when planning their estates.
by Richard Koreto
There are myths and misconceptions about estate planning. Here are the top common mistakes to avoid and help your family save thousands of dollars in unnecessary taxes and probate fees:
- Beneficiary omissions — Not naming contingent beneficiaries or failing to review beneficiaries often enough. This may subject your estate to probate, creditors and delays.
- No stretch IRA — No contingent beneficiary on an IRA may mean there is no stretch IRA, a valuable tax break that enables someone who inherits an IRA to draw out distributions over his or her life expectancy if the original beneficiary has died.
- Forgetting to change an ex-spouse on an IRA — Your new spouse becomes your beneficiary the day you get married, but not in an IRA. This can have disastrous consequences for your new spouse and family.
- Leaving assets directly to a minor without dealing with guardianship issues — Who will handle their inheritance? The phrase “for their benefit” welcomes a whole host of potentially abusive interpretations.
- Ownership mistakes and imbalances — If too many assets are in one spouse’s name, it could wreak havoc with tax planning. One spouse may have a much larger IRA and own a vacation house in his or her name only. By shifting the house or investment to the other spouse, the estate becomes more equalized, possibly reducing taxes.
- Not having a residuary clause — A residuary clause covers items not named in a will or included in a trust. These can include items you don’t yet own but will before your death. Sometimes there are things you might not even know you own.
- Not planning for the unexpected — There are a multitude of things that could happen, such as a sudden decline in your spouse’s health or a change in your assets. You can address this by having assets go to a trust. You can control how, to whom and when money gets distributed.
- Not dealing with your own mortality — Don’t leave your family ruined because you don’t want to admit to yourself that you are going to die someday. Don’t make matters worse by failing to plan.
- Not updating your will — Many changes take place within a family or business structure. Ensure the assets you leave behind are given to the people you intended to have them.
- Not planning for disability — An unexpected long-term disability can affect your personal and financial affairs in myriad ways. Decisions such as who will handle your finances, raise your children or make health care decisions on your behalf are essential. It may be necessary to appoint a power of attorney or create a living trust to work on your behalf if you’re unable to do it for yourself.
You can benefit from having an estate plan. Not only can it help maximize the actual value of the estate you pass on to your heirs and beneficiaries, but you’ll also have an opportunity to make informed decisions concerning how your assets should be handled while you are still alive.
As experienced estate planning specialists, we can help you get started or answer your questions. Give us a call.
Did you enjoy reading, Don’t Make These Top Estate Planning Errors! Interested in learning more about this subject? Attend an upcoming webinar!
Have You Properly Protected Your Loved Ones? (FREE Estate Planning Workshop)
Join us for a free Trustee and Power of Attorney Training School Webinar, Medi-Cal Trust Webinar, and/or Probate Webinar. Get registered today!
This website is not intended to be a source of solicitation or legal advice. General information is made available for educational purposes only. The information on this blog is not an invitation for an attorney-client relationship, and website should not be used to substitute for obtaining legal advice from a licensed professional attorney in your state. Please call us at (626) 403-2292 if you wish to schedule an appointment for a legal consultation.
For more information about The Hayes Law Firm, visit our Google My Business page.
- Clawing Back Assets After Probate - June 3, 2023
- How to Create a Business Succession Plan - June 2, 2023
- IRS Announces HSA Limits for 2024 - June 1, 2023
The information on this website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.