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How to Avoid the Top Estate Planning Errors

 

There are myths and misconceptions about estate planning. Here are the top common mistakes to avoid and help your family save thousands of dollars in unnecessary taxes and probate fees:

  1. Beneficiary omissions — Not naming contingent beneficiaries or failing to review beneficiaries often enough. This may subject your estate to probate, creditors and delays.
  2. Forgetting to change an ex-spouse on an IRA — Your new spouse becomes your beneficiary the day you get married, but not in an IRA. This can have disastrous consequences for your new spouse and family.
  3. Leaving assets directly to a minor without dealing with guardianship issues — Who will handle their inheritance? The phrase "for their benefit" welcomes a whole host of potentially abusive interpretations.
  4. Ownership mistakes and imbalances — If too many assets are in one spouse's name, it could wreak havoc with tax planning. One spouse may have a much larger IRA and own a vacation house in his or her name only. By shifting the house or investment to the other spouse, the estate becomes more equalized, possibly reducing taxes.
  5. Not having a residuary clause — A residuary clause covers items not named in a will or included in a trust. These can include items you don't yet own but will before your death. Sometimes there are things you might not even know you own.
  6. Not planning for the unexpected — There are a multitude of things that could happen, such as a sudden decline in your spouse's health or a change in your assets. You can address this by having assets go to a trust. You can control how, to whom and when money gets distributed.
  7. Not dealing with your own mortality — Don't leave your family ruined because you don't want to admit to yourself that you are going to die someday. Don't make matters worse by failing to plan.
  8. Not updating your will — Many changes take place within a family or business structure. Ensure the assets you leave behind are given to the people you intended to have them.
  9. Not planning for disability — An unexpected long-term disability can affect your personal and financial affairs in myriad ways. Decisions such as who will handle your finances, raise your children or make health care decisions on your behalf are essential. It may be necessary to appoint a power of attorney or create a living trust to work on your behalf if you're unable to do it for yourself.

You can benefit from having an estate plan. Not only can it help maximize the actual value of the estate you pass on to your heirs and beneficiaries, but you'll also have an opportunity to make informed decisions concerning how your assets should be handled while you are still alive.

Let us know if you have any questions.

 

 
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Coulter & Justus, P.C.
Coulter & Justus, PC
(865) 637-4161
9717 Cogdill Rd, Suite 201
Knoxville, TN 37932
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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