7 Major Errors in Estate Planning – A Financial Advisor’s View

These days, access to estate planning counsel and financial advisors is no longer restricted to the very rich.

(Well, there was never actually an exclusive club of rich folks who kept the secret rituals secret, but it used to cost a lot more than it does today. And in the good old days, only the very rich had to concern themselves with income taxes and death taxes.)

These can burn you.

But even with the increasing democratization of trust and estate planning, there continues to be a large group who, somehow, just don’t get the word. Forbes Online contributor Rob Clarfeld posted an article ten years ago (but still relevant today) entitled “7 Major Errors In Estate Planning.” His top seven aren’t necessarily the same seven I’d pick (I’ll put up my own short list one of these days) but they’re awfully common nevertheless. Here are the bullet points in Rob’s list – his comments are at the link.

1. Not having a plan at all (aside from the “plan” that legislators have written for you).
2. Trying to do everything yourself.
3. Failing to consider how IRA and life insurance beneficiary designations and improper titling of assets can affect your planning.
4. Failure to understand the interplay between gift taxes, death taxes, and life insurance.
5. Allowing your annual gift tax exclusions ($16,000 per recipient per donor) to go to waste.
6. Failing to take advantage of the $12.06 million lifetime gift tax exemption amount scheduled to sunset on December 31, 2025.
7. Leaving assets outright to adult children, rather than in well-designed “spendthrift” trusts that protect them from predators, creditors, and improvidently-chosen spouses.

Are you guilty of any of these planning sins? If you know you are (or even think you are), contact me for more information. You can use the form in the sidebar.