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Estate Planning - Common MistakesPosted by Randy on: 2005-11-10 15:13:26 in category:
Retirement Headlines [ Print | Permalink / 0 Comment(s) ] ESTATE PLANNING: 10 MISTAKES TO AVOID by Howard S. Gartenhaus, CFS There has been so much talk about the repeal of estate taxes that many people think there is no federal estate tax. Not true! The threshold for imposing this tax was raised to $1.5 million per person for people dying in 2004, and the estate tax is scheduled to disappear for only one year's 2010. In 2011, the estate tax is scheduled to reappear. Unfortunately, the false perception of repeal has opened the door for some potentially costly mistakes. Mistake 1: Failure to have a will. Wills allow you to decide who will inherit your assets and name guardians for your minor children. If you fail to make a will, your state has standard laws, called intestate's laws, which will govern who will inherit. Such laws usually leave set percentages of your estate to spouse and children, and can easily not match your desires. Mistake 2: Failure to keep your will up-to-date. Many state laws provide that a will is invalid if made before a major life event, such as marriage, divorce, moving to a new state, or the birth or adoption of a child. It's fairly simple to keep these updated, and they can be easily changed. Mistake 3: Failure to keep track of beneficiaries of IRAs, retirement plans and insurance policies. These assets are unique in that you determine who will receive their benefits by filling out a beneficiary form. They are not governed by your will. Therefore, it is important to review designated beneficiaries to make certain that you are not leaving these assets to someone you no longer wish to receive them. Mistake 4: Failure to plan for ample liquidity within your estate. Most people don't realize that the costs to settle your estate require the ability to quickly turn assets into cash. It's more involved than paying for a funeral. Without sufficient cash to pay taxes or other expenses, your family may have to sell illiquid assets----such as a family business or other property----at an inopportune time. Avoid putting your family it's the position of having a fire sale�?�¢?? on precious family possessions by providing for sufficient liquidity. Mistake 5: Owning everything jointly with your spouse. It's very common for most married couples to own their assets are jointly with rights of survivorship. However, if your joint net worth is over $1.5 million, joint ownership could be an (Continued on page 3) expensive mistake. Consider owning some assets separately as part of your overall estate plan. Mistake 6: Naming the wrong executor and/or trustee. Executors are called upon to collect assets, pay obligations, and distribute your assets. Your trustee must enforce all the provisions of any trusts you created. Did you choose people who have the knowledge, integrity and stamina in the face of pressure from family members to fulfill these obligations? Mistake 7: Naming the same guardian for your minor children as for the property you've left to support them. If you have any doubts that the person you've chosen as guardian has the financial acumen and integrity to manage the property you've left for your children, name a separate guardian to manage your children's property. Mistake 8: Leaving everything to your spouse. If your net worth is high enough, this could be a costly mistake. For most people who may be subject to estate taxes, a relatively simple estate plan can save hundreds of thousands of dollars in estate taxes.If you are a business owner, don't forget to plan for the succession and or buy-out of your business, too. If your spouse is not involved in the business, or if you have a non-spouse business partner, leaving the business to your spouse could be disastrous. Mistake 9: Leaving the wrong assets to the wrong people. If your son was a special needs child, you would not leave him money to handle on his own. By the same token, you should not leave too much cash to a teenager, or distribute a sizeable sum to a person with a history of substance abuse or who is otherwise unwilling or unable to manage it. Mistake 10: Failure to plan. The future is in your control, but you have some important decisions to make. How you structure your estate can have a significant impact on your family. If you have been procrastinating about estate planning, get help now! Bio: Howard S. Gartenhaus, CFS, is the president and founder of Gartenhaus Financial, Inc. (www.gartenhaus.com and www.lowstressinvestments.com). He established the firm in 1990 after starting his investment advisory career on Wall Street in 1974. Gartenhaus carries over 20 years of financial experience in asset and income protection, asset growth strategies, and tax reduction consultation. Gartenhaus Financial services include personal and business investment management, retirement planning, business retirement plans, low-stress investments, estate planning, insurance and college funding. He is currently president of the Chevy Chase Association of Business Professionals. Mr. Gartenhaus also carries a top five-star rating with the Paladin Registry, a premier review service for rating and evaluating only the most trusted and experienced financial advisors and planners in the industry. Phone: 301-670-5505 Email:howard@gartenhaus.com |
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