Tuesday, June 5, 2018
There are common mistakes, then there are surprising mistakes, and then there are surprisingly common mistakes. Here is a list of 10 mistake that may seem as a surprise or may simply be a shock as they are as common as they are.
- Not naming a contingent beneficiary on insurance policies or retirement accounts. Often a single beneficiary is not enough and not naming a secondary could cause certain accounts to transfer to your estate, leading to expensive and time consuming probate.
- "Selling" property for $1. The IRS will consider an property sold for less than market value to be a gift, and could lead to your inheritors paying high capital gains and losing the property's "step up" value.
- Naming specific investments in your will. This can cause a huge issue when certain investments are no longer owned and are valued at a significantly higher price. The estate may be required to repurchase the investments and leave other beneficiaries with little or no assets to inherit.
- Not thinking through a well-intended gift. Putting certain restrictions on gifts, even with the best intentions, may not align with the beneficiary's own life choices. If a person leaves a house to a child with the instructions that to inherit the child must live in it, the child may have to choose between a well-paying job in another location and their childhood home.
- Leaving assets directly to a minor without dealing with guardianship issues. The phrase "for the benefit" is vague when it comes to young children, and teenagers could say almost anything is for their benefit.
For more, please refer to the article.
See T. Eric Reich, 10 Surprising (or Surprisingly Common) Estate Planning Mistakes, Kiplinger, June 1, 2018.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.