Helping Individuals Plan For Everyone They Love and Everything They Own

Keith’s Top Ten Estate Planning Mistakes

By Keith L. Davis, Esq., JD, MBA, LLM (Tax), CPA

Listed below are the top ten avoidable planning mistakes that I frequently see in my estate planning practice. Each can be devastating to family finances and relationships.

10	Non current beneficiary designations. Retirement plans, insurance policies are paid to the designated beneficiary or beneficiaries. If relationships have changed, payment to the “wrong” person may result.
9	Incorrect beneficiary designations. If minors are named as designated beneficiaries at the time of death, the court will appoint a conservator to supervise the assets. Many find this process intrusive, cumbersome and expensive.
8	Unprotected beneficiaries. Many of our most cherished loved ones are not good money managers. Sadly, statistics published by the American Bankers Association say the average beneficiary will spend their inheritance ion only eighteen months.
7	Lack of Retirement/IRA Tax Planning. Retirement plans are subject to both income taxes of 15% to 35% and estate taxes (43 to 47%) if the fair market value of your estate exceeds $1,500,000.
6	Putting Appreciated Property in Joint Tenancy with Children. While this one (less efficient) technique to avoid probate, it is very expensive because the children are usually subjected to avoidable income tax when the property is sold.
5	Married Couples Owning Property in Joint Tenancy. Use of joint tenancy avoids probate, but leads to the loss of the unified credit for estate tax purposes. If the value of your assets at death exceed $3,000,000 this triggers an avoidable estate tax beginning at 43%. Other more efficient techniques are available to avoid probate.
4	Not planning for items of sentimental value that frequently lead to hard feelings, family squabbles and broken relationships.
3	Failing to name a guardian for minor children.
2	Not planning for your disability. If you have attained age 65, your chance of developing Altzheimer’s disease is 50/50. With planning, you choose who will help manage your affairs in the event of disabilty. Your chance of needing nursing home care before you die approaches 50%
1	Doing Nothing. This is the most serious and common mistake since it often compounds many of the other mistakes. Many people work 80,000 hours (2000 per year for 40 years) to accumulate an estate, but spend less than an hour to plan for their loved ones.

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