Common Estate Planning Mistakes

Estate planning is an essential step to ensure that your assets are distributed according to your final wishes. If an Estate plan is not properly established and updated, your Estate may have to pay high taxes unnecessarily and your beneficiaries may not receive the assets that you intended for them. To minimize the risk of this happening, avoid these three common Estate planning mistakes:

Mistake: Not naming beneficiaries or not keeping them updated on your financial accounts.

Keep your beneficiary designations up-to-date on all your financial documents, such as your 401K, brokerage accounts, bank accounts, life insurance policies, etc. Many times, individuals never fill in a beneficiary, thinking they will do so later, but then forget to do so. Additionally, if you have experienced a major life milestone, such as the birth or death of a child or grandchild, marriage, or divorce, you may want to revise your beneficiary designations based on your current life circumstances. These beneficiary designations supersede the instructions in your Will or Trust, so it’s essential that they reflect your wishes.

Mistake: Naming an adult child as a joint owner of your financial accounts.

Don’t name an adult child as a joint owner of a financial account. Many individuals do this in an effort to avoid the probate process. While this will enable those assets to avoid probate, it opens up a Pandora’s box of other problems. Consider the following scenarios:

  • If you name a child as a joint owner of your accounts and that child divorces their spouse, the bank account that they jointly own with you can become marital property and end up in the hands of your child’s ex-spouse.
  • If you name one child as a joint owner of your accounts with the assumption that they will share the assets in that account with their siblings, there is no mechanism to enforce that. If the named child decides to keep the assets for themselves, they legally can do so.  Further, there would be gift tax consequences for the child that transfers the assets to his or her siblings.

Mistake: Using low-cost online Estate planning materials to draft your Estate Plans.

Online materials are inexpensive but they’re often ineffective. These are pre-written documents that allow you to “fill in the blanks” in a few areas, but for the most part, treat everyone’s life situation the same. In contrast, working with an attorney to properly write and execute Estate planning documents that are customized to your financial and familial situation can help your beneficiaries minimize the likelihood of a Will contest, probate litigation, or having to pay high taxes. Professionally-drafted Estate planning materials may cost more up front, but will ultimately pay for themselves when your beneficiaries can easily access your assets with minimal taxes and hassles.

Huth, Pratt & Milhauser

Huth, Pratt & Milhauser is a boutique law firm that offers a wide range of legal services in the specialty areas of Wills, Trusts, Estates, Probate, Guardianship, and related matters. The range of legal services that Huth, Pratt & Milhauser provides in these specialty areas includes planning, administration and litigation. The experience and skills of our attorneys and staff, coupled with our knowledge of applicable law, enable us to provide outstanding representation to our clients.

Although we are located in South Florida, we proudly serve clients throughout the country and around the world from our Boca Raton offices. We strive to provide superior and focused counsel in a timely manner and at a competitive price.

2500 North Military Trail, Suite 460
Boca Raton, Florida   33431
Phone: 561-392-1800

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