Wednesday, January 1, 2014
Estate plans can become more complicated over time. Here are some inconsistencies that tend to bedevil estate plans:
- Power of attorney. Naming an agent to handle financial and legal matters in the event of an illness is essential. But clients tend to have trouble designating when an agent should be able to act, whether it be immediately or only when a client is disabled.
- Financial projections. Estate planning attorneys tend to devise a plan based on a current balance sheet. But clients may continue to grow wealth, warranting more aggressive estate-tax minimization, or may run out of money before death, making bequests irrelevant.
- Tax allocation. Tax allocation clauses tend to be ignored, but if a client’s estate will be subject to an estate tax, it may be important to determine what heirs will bear the tax burden.
- Specific bequests. If a client’s estate declines, it can be difficult to determine who the client intended to primarily benefit: the remainder beneficiaries or the specific bequests.
- Multiple Trusts. If a client has a will that distributes assets to a trust as well as an irrevocable life insurance trust, then these two documents may conflict.
See Martin Shenkman, Estate Planning Dangers to Avoid, Financial Planning, Nov. 1, 2013.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.