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1.
Non - Current
Beneficiary
Designations
Retirement plans,
insurance policies are paid to the designated beneficiary or
beneficiaries. If relationships have changed, this may
result in payment to the "wrong" person.
2. Incorrect
Beneficiary
Designations
If minors are
named as designated beneficiaries at the time of death, a court
appointed conservator will be named to supervise the
assets. This often occurs when the children were
originally named as contingent beneficiaries. Many will
find this process is intrusive, cumbersome, and expensive.
3. Not
Protecting Your
Beneficiaries
Many of our most
cherished loved ones are not good money managers.
Statistics indicate that no matter how large or small, the
average beneficiary will spend his or her inheritance within
eighteen months. Often beneficiaries are pressured to make
family 'loans' with their new found wealth. Relationships
can be hurt. This can be avoided with proper planning.
4. Not Planning for
Retirement
Plans and IRA's.
Retirement plans
are subject to both income tax of 15% to 39.6% upon
distribution and estate taxes at death (37% to 50% if the
fair market value of your estate exceeds $1 million).
Planning techniques are available to greatly increase after-tax
distributions to your loved ones.
5. Putting Property in
Joint
Tenancy with Children.
Children will be
subjected to potentially avoidable income and capital gains
taxes upon sale. Joint tenancy may lead to
unintended beneficiaries.
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6. Married Couples Owning
Property
in Joint Tenancy.
This leads to the loss of one
unified credit for estate tax purposes. For couples with
over $1 million in assets - this will trigger a potential estate
tax up to $271,000. More efficient techniques are
available to avoid probate.
7. Not Planning for Items of
Sentimental Value.
These items frequently lead to
hard feelings, family squabbles, and broken relationships for
years to come.
8. Failing to Name a Guardian
for Minor Children.
Unless you name a guardian for
any minors to whom you wish to leave money, the court may pick
one for you. Court costs can eat up much of this estate.
9. Not Planning for Your
Disability.
If you have attained age 65,
your chance of developing Alzheimer's disease is very
high. During disability, planning allows you to choose who
will manage your affairs.
10. Doing Nothing.
This is the most serious and
common mistake, since it often compounds many of the other
mistakes.
Attorney Jim Evans teaching his clients in
"Client Law School".
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