The top 5

September 10, 2015 - Posted by: admin - In category:

taxes - No Responses

A wise man learns from the mistakes of others.

I recently saw a good article on this topic by an estate planning attorney in Florida named Steven Silverman. I don’t know Mr. Silverman, but his article is worth reading. CLICK HERE TO READ THE ARTICLE. In summary, here are the major common mistakes identified by Mr. Silverman:

Trust Funding: Amen. We have spent a great deal of time and blog post space discussing this topic and, frankly, I could write about it just about every day and would feel justified in doing so. This is the issue that I encounter most often as I review existing estate plans. Far too many trusts are totally or partially empty and thereby are failing to accomplish their designated purpose–namely to protect and provide for the orderly management of various assets. An empty trust is a useless trust.

Beneficiary Designations: You can liken this to an irrigation canal and a fruit tree orchard. It makes no difference if the fruit tree orchard has a carefully designed and well-maintained system of ditches if the flow gate from the larger canal is not opened and properly directing water towards the series of ditches. What happens “upstream” controls what will happen (if anything) downstream. In this analogy, your trust is downstream in the flow of assets and the beneficiary designations are “upstream”. If the beneficiary designations are either missing or not completed properly, the assets will never flow downstream to the trust. Though usually much more simple in nature (and far few pieces of paper) in comparison to an entire trust-based estate plan, the beneficiary designations are just as important. Unfortunately, this piece of the puzzle is often forgotten and/or disregarded by financial advisors and clients. This is one of many reasons why financial advisors and estate planning attorneys need to work in concert with one another to serve the best interests of the client.

Access to Documents:  If nobody can find your estate planning papers after you are disabled or dead, then problems will follow. It may be the case that the lost estate plan will be disregarded and all of your work will have come to naught. Thankfully, this problem is now very easy to protect against, given the cloud, computers and other mediums of storing electronic documents.

Tax Planning:  Even though estate tax is currently a non-issue for the vast majority of Americans (including the vast majority of Utah residents), there are other equally-important tax considerations that can come into play for just about every American (and every Utah resident). Preserving and protecting the ability to achieve a “step up in basis” on certain assets can be a very important and very valuable consideration. It is no exaggeration to say that this one issue can equate to tens of thousands of dollars in taxes owed or saved.

Liquidity:  Will there be enough cash to pay for funeral costs, medical bills, professional fees and other immediate needs? What about mortgage payments and/or other debt payments? What money will be used to pay utilities, real estate taxes and other like costs until the real estate and/or other assets are sold? Again, this is a potential problem that is fairly easy to prevent with a little forethought and planning.

As always, we are here to help! Please click here to contact us.

Leave a Reply