How to Avoid the Most Common Estate Planning Mistakes

6:06 pm Asset Protection, Estate Planning

Oops 150x122 How to Avoid the Most Common Estate Planning MistakesChange is a part of life – unfortunately, it is also a factor in derailing many estate plans that have not been updated to account for new circumstances.

The most common mistakes that effect estate plans of any size include:

Heir Designation – estate plans should be reviewed annually to ensure that the proper beneficiaries are designated.  Too often ex-spouses or even those who have already predeceased the benefactor are listed as beneficiaries in estate plans that have not been updated for years.

Titling Assets – failure to properly title assets in the name of the trust has resulted in the unnecessary payment of additional estate taxes that the trust was established to prevent in the first place.  Failing to designate the proper beneficiaries on retirement account plans has also brought about unpleasant and unintended consequences.

Heirs Cannot Pay Taxes – many times heirs cannot afford to pay the taxes on their inheritance, which is due nine months after a benefactor’s death.  The assets left to them may not be convertible to cash to pay taxes, leaving them to sell at a loss or borrow to pay the taxes.  Purchasing life insurance to cover the taxes is a simple solution to this problem.

Wrong Executor – unless a family member is a skilled legal or financial advisor, it’s usually best to name someone with those skills as your executor, especially for a large estate.

For more information on estate planning and asset protection, contact our Newport Beach law firm.

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