Avoid the 7 Costly Estate Planning Fallacies
Should your estate plan cause you concern? Here are seven blunders that could end up plaguing your loved ones—and ways to avoid them.
- "I already have a will." If your situation has changed because of a death or birth in your family, or a move to another state, it's time to update your will.
- "Everything's joint." Joint ownership seems ideal because it avoids probate and expedites the survivor's access, but joint title may also inflict unnecessary tax burdens and upset trust plans.
- "I'm single; I don't need an estate plan." But who will benefit from your estate? Perhaps you have children, grandchildren or good friends to consider. You may also want to remember us in your will.
- "My will covers everything." Not necessarily. Jointly owned assets with rights of survivorship pass to the surviving owner regardless of what your will says, and your retirement assets may never reach your rightful heirs if you've failed to update beneficiary designation forms. If you have charitable goals, making a Genesis Foundation the beneficiary of a retirement plan can cut the taxes on your family's inheritance.
- "No estate tax? Then I don't need a trust." In 2009, the amount exempt from estate tax is $3.5 million. Estate taxes are repealed in 2010, but reappear in 2011 with a $1 million exemption. You may think estate taxes aren't an issue in the next two years, but there are numerous family and philanthropic situations in which trusts remain valuable estate planning strategies.
- "My affairs are in good hands." You may have a fine lawyer—but who is your executor or personal representative? This person will gather assets, pay creditors, manage investments, file tax returns and pay your beneficiaries.
- "I worry more about my heirs, not myself." A good estate plan should also bear in mind your current needs. Ask your estate planning attorney about estate planning tools that can provide you income for life, before supporting your family, friends and favorite causes.
For more help sidestepping estate planning traps, consult an estate planning attorney or contact Steve Goebel, CFRE at 309-281-4392 or firstname.lastname@example.org.
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The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.