Jan 15, 2015

Experts weigh in on common estate planning mistakes



The Wall St. Journal recently ran an excellent article featuring experts' views of the most common estate planning mistakes. The most common error? Failing to do it entirely. 

The main reasons for the neglect? Fear of talking about death; not wanting to upset family members; avoiding difficult conversations. Sadly, ignoring the issue means that the state in which you reside will have the last say over who gets what from your estate. States Larry Zimpleman of Principal Financial Group: "Anyone who will have assets in their estate at death (regardless of amount) should consider the need for estate planning. If you don’t plan how to distribute your assets at your death, then your state of residence will often impose its rules for how your assets will be distributed. It’s very unlikely your view on how to distribute assets is consistent with what your state laws might say."

Consumer Advocate Eleanor Blayney says that failure to keep a plan updated is a big mistake. An estate plan cannot be a "once and done" deal because as long as you keep on living, things change. "Life has a habit of changing, and so must the best laid plans," she writes. "But it’s hard to stay alert to all the 'triggers' for making plan changes. A better solution is to review the plan every year, ideally with a competent legal and financial professional." 

Michele Perry Higgins of California Financial Advisors notes that often, a person with a trust will fail to transfer assets into it. Some just forget to do it. Others mistakenly assume their lawyer will do it. However it occurs, assets that have been omitted from a trust will have to go through probate, causing the family to incur the costs and hassles that the trust was intended to circumvent. 

Wealth manager George Papadopoulos says people frequently name the wrong beneficiaries on retirement accounts. Retirement plans pass to the individual listed as the beneficiary, not through your will. Beneficiary designations must be kept updated. He also advises refiling beneficiary forms even if your designations have not changed, if the financial institution holding your retirement account is taken over by a different institution. 

To read the original article in its entirety, click here.

1 comment:

Zequek Estrada said...

It kind of amazing how much of an impact the topic of death has. Even so, I find it surprising that it's a fear of talking about it that cause most people to neglect estate planning. It might be helpful to think that it'll be easier to take care of it now rather than later. http://www.hastingslawfirm.com/estate-planning/

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