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Helping You Navigate Complex Legal Issues

Escaping some of the biggest estate planning mishaps

Gregory A. Lang

You have worked hard your entire life to amass a sizable estate and build a legacy to leave behind for your loved ones. In order to ensure that your family, friends and other loved ones get the maximum benefit of your generosity - and that your wishes regarding bequests, inheritances, charitable giving and the dispensation of your property are followed - you need to have your proverbial ducks in a row. You need a comprehensive, well-prepared estate plan.

There are several ways in which you can protect your assets through the process of estate planning, all of which could have different tax consequences and practical impacts. You - and your estate planning attorney - should carefully consider which method is best for your unique financial situation, and then implement that plan accordingly.

The biggest estate planning mistake: no plan at all

Even if you only have a simple will in place, at least you've taken the first step. It may not be the best method, since it might not account for possible tax issues, and it could still be up for debate after you're gone in the form of a will contest that could result in protracted litigation, but it's still better than nothing at all. This is definitely true if it is unclear or ambiguous, doesn't address substantial portions of your estate, goes against statements you've made regarding your assets or seemingly favors one person to the detriment of all others.

Not properly utilizing trusts

A living trust could be your best bet to pass down a significant amount of assets, particularly if the person you are leaving the property to is underage or otherwise incapable of handling his or her own financial affairs. Trust documents can not only dictate to whom the funds will pass, but can also arrange for terms on control of the assets by a third party trustee like a bank or trusted relative.

In addition, trusts will help you avoid the probate process. This is of the utmost importance for some people, who want their family's financial business to remain private and not become part of the public probate court record.

Ensuring that accounts and real property are titled correctly

Unless your investment accounts, retirement accounts, IRAs, 401ks, checking/savings accounts and other funds are set up with beneficiaries and "transfer on death" designations, then these funds could be funneled into probate when you pass away. It is possible to avoid that if you use them to establish a trust or you have each individual fund set up with a "transfer on death" provision that automatically reallocates assets to your chosen beneficiary.

Understanding the interplay of life insurance proceeds

Life insurance used to be thought of as something that only the elderly and infirm, or those with young children needed. That simply isn't the case anymore. Yes, life insurance is very important for both of those demographics, but it is good for anyone to have. Life insurance policies can not only be used to provide funds for any medical expenses incurred before your death as well as funeral and burial or cremation costs. They can also help "pad" your estate by yielding additional resources for your survivors upon your death.

Unless you've named a particular beneficiary, the proceeds of your life insurance policy may need to go through probate. This is another example of why it's important to ensure that beneficiaries are named, and policies aren't set as payable generally to your estate.

These mishaps and other estate planning mistakes - all of which could potentially cost your heirs tens of thousands of dollars or more - can be avoided by working closely with an experienced estate planning attorney. Learn more about the importance of proper planning for your high-asset estate by contacting an estate lawyer in your area today.

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