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Don't Make These Estate Planning Mistakes!

Posted by Larry Jones on Jun 3, 2021 9:30:00 AM
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Your Life, Your Death, and Your Legacy

If I were to ask you the name of your great great grandfather could you tell me? Not many folks can. But if your great great grandfather had set up a trust that was today paying you $50,000 a year tax-free I'll bet you could.

Death isn't something we like to think about, and I guess that's a good thing. After all, I believe that most people are optimistic by nature, and the subject of death isn't high on the optimist's list!

Yet, we cannot deny that this life will one day come to an end for us. We will then leave someone behind to pick up the pieces and carry on. Leaving a positive legacy is all about easing the strain on those who will have to do that. 

Have you given any thought to those who will be following in your footsteps?

Doing it right the first time

When it comes to dying, you only get one chance to do it right. Your estate plan, whatever it may happen to be, is set in stone the minute you draw your last breath. You need to get it right the first time. Here are 5 of the biggest mistakes I have seen in estate planning:

1. Not Having Assets Titled Correctly

If your home is jointly owned with survivorship rights, then the asset will pass directly to the surviving owner without having to pass through probate, thereby simplifying the process greatly. Different forms of titling accomplish different results in the light of taxation and privacy. Every asset in your estate needs to be evaluated in the light of how it's titled, including trust assets.

2. Not Having Clearly Defined Goals

Many times clients will have spoken with different advisors, such as attorneys, CPA's and insurance agents and will have executed different strategies and documents with no clear idea of just what the big picture is. At a bare minimum, both spouses need to have this big picture, and ideally, everyone involved should be educated as to your intentions. That's the only sure way to preserve harmony after you're gone.

3. Not Using Advance Directives

Would you have someone empowered to act on your behalf if the time came that you could no longer function on your own? All it takes is for one little bubble to break away in your bloodstream for everything to change. Every client should have durable powers of attorney documents prepared, such as healthcare POA and financial POA. Long-Term Care plans need to also be in place.

4. Not Funding Revocable Trusts

I am always amazed at the number of folks who will go to all the trouble to correctly structure a revocable living trust, have the documents drawn up, and then never put any assets into it! Yes it really does happen. If your trust isn't funded, YOU HAVE NO TRUST. It's that simple.

5. Not Updating the Plan

Every once in awhile I will do an insurance review with a client only to discover that the beneficiary of their life insurance policy (to use one example) is an ex-wife from two marriages ago! They've moved on to new relationships yet haven't updated these types of things to reflect the new reality. At new marriages, divorce, the birth of a child, or new job the financial plan needs to be scrutinized and updated as needed.

A Good Retirement Plan Includes a Good Estate Plan

Financial planning begins to take on a new color after the age of 50. Asset growth needs to shift more toward asset preservation and income. The retiree will care much more about income than in the growth of his portfolio, although the two can be closely related. But also, after age 50 a person's legacy should also be considered. It's time to take a serious look at your estate, and make some of those decisions that would have seemed silly at an earlier age. Doing so will go a long way toward making you look very favorable in the eyes of those you leave behind.

Until next time,


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Topics: Estate Planning

What you don't know can hurt you!

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