Top 7 Mistakes In Estate Planning: Mistake No. 7

Mistake No. 7: Not keeping plans updated.

Many families who set up estate planning several years ago are unaware that planning is an ongoing process. Family circumstances and laws change significantly over time, making their plan ineffective for their current needs. For an estate plan to work effectively it should be reviewed on a regular basis with your Attorney and other advisors to ensure that your documents are current.

Of course we are not all Crusaders, but everyone wants to protect themselves as best they can during their lifetime and provide for their family when they are gone. If you have a plan in place or are thinking of creating one, the first step is to work in conjunction with a skilled tax and estate planning attorney to provide guidance and education. Only by being clear on your goals can you develop current planning to take care of your family.

Mistake No. 6: Not planning to protect children and grandchildren's inheritances.

Many people have wonderful, effective planning to pass their wealth down to the next generation, but what then? Inheritances distributed outright can be lost, to divorce, lawsuits and creditors. It is critical to consider protecting your children and grandchildren by leaving their inheritance in trusts accessible for their own needs while barring creditors and predators.

Top 7 Mistakes In Estate Planning: Mistake No. 5

Mistake No. 5: Not planning for the cost of nursing home care.

One out of every three adults over the age of 65 will need nursing home care for some period of time and increasing health care and nursing home costs are one of the greatest threats to a comfortable retirement. The costs in Massachusetts are approaching $12,000 a month and rising.
Because long term care insurance is so expensive, many families have chosen a Protective Trust to protect their lifetime savings, homes and other asset so that they do not need to spend their lifetime savings on a nursing home. A Trust also provides flexibility to protect assets and pay for in home care and assisted living facilities.

Top 7 Mistakes In Estate Planning: Mistake No. 4

Mistake No. 4: Not considering the potential for double taxation on IRAs and other retirement plans.

Taxes on IRAs and other retirement plans can create a 70% tax before your IRAs can reach your children or grandchildren. IRAs and other retirement plans are taxed twice, once as part of your taxable estate, and a second time as they come out of the IRA as income. These taxes together can reduce your IRA by 70% unless you plan effectively.
The combination of a Retirement Plan trust and an effective plan to stretch out and protect an IRA over the lifetime of a younger person, such as a child or grandchild, can create significant tax savings and magnify growth for your family.

Top 7 Mistakes in Estate Planning: Mistake No. 3

Mistake No. 3: Not planning for the Massachusetts and Federal Estate Taxes.

A trust is an effective way of doubling the amounts that a married couple can pass tax free to their children and grandchildren. While the federal estate tax free amounts continue to change and may drop to $1 million per person in 2011 - or even as soon as 2010 - it is important to consider how the growth of your assets over time will effect your tax situation. The state of Massachusetts also imposes a separate estate tax on all estates over $1 million. Your planning should address both of these taxes, which can be substantial.

Top 7 Mistakes in Estate Planning: Mistake No. 1

During the Middle Ages, crusaders sailing East developed Trusts to protect their families and their assets when they could not. A lot has changed over the centuries, but the essential purpose of estate planning has not. People plan to protect themselves and their families from probate, taxes and costly mistakes. However, without fully understanding the changing legal and financial landscape even a well thought out estate plan can fail. It is critical to plan with skilled legal, tax and financial professionals and to watch out for common pitfalls. If you have already planned your estate or are considering creating a plan these are the seven most common mistakes to be wary of.

Mistake No. 1: Not planning to avoid probate

Many people only have a will or nothing at all to direct the disposition of their estate. However, a will alone cannot avoid the expenses and time delays of the probate process for those with estates greater than $15,000. Even in the simplest situation the process requires a minimum of a year. If your family or financial situation is more complicated because of blended families or conflict among your children, the process can take much longer than that.

The probate process is also public, with family and financial matters becoming public record, including announcements in the local papers. This can attract unsavory attention to a surviving spouse or other family members.

Consider avoiding the expenses and time delays of probate and protect your family with a Trust. A Trust, with you in charge, can own your home and other assets and allow them to pass to your family smoothly and efficiently. It can also build in tax savings and asset protection that a will cannot. It is very important to work with a qualified professional who will help you understand how a trust and other documents should be designed to meet your goals.