Estate Planning Top 10 Mistakes

Failing to change, review or update beneficiary designations. Failure to check that the beneficiaries designated on assets such as life insurance, bank accounts, retirement accounts, etc. are legal and correct. Many times people will incur a change in their relationships but will forget to change the beneficiary designation, leading to a gift to a beneficiary that you may not want to get your assets. Also, many times people forget that a minor cannot be a designated beneficiary without the need to have a conservator appointed by the court for the child if the child is still a minor at the time that the funds become payable to him or her. This can lead to the child having to absorb the additional expense of going to court to get his or her money.

Failing to protect their beneficiaries. Many of our loved ones may not be good money managers. Statistics show that no matter how large the inheritance, the average beneficiary will spend it all within 18 months. Beneficiaries are also often pressured to give other family members loans, which may lead to strained interfamily relationships.

Not planning for retirement plans or IRAs. Retirement plans are subject to income tax upon distribution and estate tax, if they are held in connection with a taxable estate. There are ways that retirement plans and IRAs must be dealt with to avoid excessive taxation on them. Planning can take care of this.

Not planning for family heirlooms or items of sentimental value. These items, although rarely worth any significant monetary value, can lead to a great deal of family fighting for generations to come if not dealt with properly.

Failing to name a guardian for minor children. In the event that something happens to you as a parent, it is important to decide who will care for such children and under what terms.

Not planning for your own disability. If you should become incapacitated, if is very important to designate someone on your terms to act in your place and make decisions on your behalf. Have you decided who you trust to make decisions for you?

Putting property in joint tenancy with children. Children will be subjected to avoidable income taxes upon the sale of a piece of property. Joint tenancy may also lead to unintended beneficiaries, such as creditors or a divorcing spouse.

Married couples owning property in joint tenancy. For those who may be subject to estate tax, property owned in joint tenancy may cause one spouse to lose or waste their unified credit exemption amount, which may lead to the payment of unnecessary estate tax.

Assuming that if you qualify for Medicaid, long term care is a covered benefit and, as such, is free. If you are on or ever need Medicaid benefits for long term care, Medicaid will come after your estate for repayment of the amount they expended on caring for you. Often, this leaves families in a position where all of the hard earned family assets have gone to the government and left the families with little or nothing. Proper planning can help you avoid this.

DOING NOTHING! If you don’t do anything with your estate planning, you can be compounding all of the above mistakes and leaving your family to deal with disaster upon your death. Don’t leave disaster, pain and suffering as your legacy. Make sure that your family is taken care of by getting help today.