Legacy planning is as crucial as your final wishes. Kiplinger’s recent offering, “Some of the Biggest Estate-Planning Mistakes People Make,” notes that it’s often the smallest things that can come back to haunt you. Here’s what you should discuss with an experienced estate planning attorney to help create and maintain your legacy and some of the common mistakes people make when planning (or not planning!) for their estates, when they die.
No see-through provision in a trust. A “see-through trust” is a trust that satisfies certain legal requirements and serves as the named beneficiary of an IRA. Thus, the IRS will “see through” the trust and treat the trust’s beneficiaries as if they were the IRA’s direct beneficiaries, and their life expectancies will be used to calculate the IRA’s required minimum distributions. A see-through provision also allows these distributions to be taxed at the individual beneficiary’s tax rate instead of that of the trust.
A schedule that’s blank or incomplete. These are attachments to the trust document that have crucial details about the trust, like the inventory sheet of the trust. This will spell out what assets have been transferred into the trust. All schedules must be complete and accurate—never blank! Work with your attorney to see that your trust actually owns the assets you intend for it to own.
POD/TOD accounts. POD is “payable on death,” and TOD means “transfer on death.” These designations permit the beneficiary to receive assets without probate. Bank accounts, including checking, money market, savings, and CDs should have POD and TOD instructions.
Too many accounts. The FDIC imposes a limit of $250,000 per depositor, per bank on the amount that it’ll insure, so you may want to consolidate your bank accounts if you have more than you actually need, so that you’re protected. If not, you may make your estate overly complex.
No inventory of assets. Even with a meticulous system with all the right documents, it’s to no avail if no one knows where they’re located when you die. Give your family a checklist that says where they can find your birth certificate, Social Security card, marriage license, pre-nuptial agreement, military records, estate planning documents, burial instructions, bank and credit documents, mortgage papers, personal financial documents and safe deposit box and keys.
Your legacy should leave a lasting impression of care and organization, so that your family doesn’t have to figure out a puzzle, creating more stress in an already demanding situation.
Reference: Kiplinger (May 2017) “Some of the Biggest Estate-Planning Mistakes People Make”
To avoid making these, or other mistakes with your planning, contact our office at 801-438-7120 for a free consultation.