19 April

Top Ten Common Estate Mistakes

By Bob Morris and David Grant

“Poor Man’s” estate plan. Do-it-yourself estate plans can create more problems than they solve. Many well-intentioned people will title assets jointly with a spouse, friend, or child, not understanding the significant legal ramifications. Others will name a “Pay on Death” (“POD” or “TOD,” as they are sometimes called) beneficiary and consider their estate planning complete, while not planning for very real risks and contingencies.
Failure to plan for significant others. Domestic partners and others who cohabitate and live together do not share the same legal rights as married couples with regard to inheritances, health decisions and final wishes. Proper planning can ensure that your final wishes are carried out by those whom you love and trust.
Missing asset protection opportunities. While State statutes provide for limited asset protection; much can be accomplished through advanced planning opportunities to protect what is rightfully yours. Much can be done to keep your existing or future creditors at bay.
Transfers to minor children. Without proper planning gifts to minor children may become very expensive and onerous, as the administration of such gifts is supervised by the court. Worse, your kids may become like Oliver Twist or conversely, Paris Hilton.
Guardianship. Due to advanced age or accident, many individuals are left unable to make important medical or financial decisions. In the absence of proper planning the only alternative may be an expensive and time consuming guardianship proceeding where the court will oversee all decision making for the lifetime of the incapacitated individual.
Avoiding probate. A common misconception is that a Will will avoid probate. However, if assets are owned in a person’s name when they die, such assets will be subject to probate. Probate can easily be avoided through proper and simple estate planning.
Children or parents with special needs. With proper planning an individual with special needs can still benefit from your estate plan, without disqualifying them from public benefits, otherwise available to them.
Unforeseen divorce. Nevada is a community property state. This means anything you own or leave to an heir could cause added complication without proper planning, in the event of a divorce or separation in determining how property is settled.
Overpayment of taxes. The Federal government, and some states, impose an estate and/or inheritance tax on estates valued over certain amounts. Death can also bring about significant income tax liability. Proper planning can minimize how much money is paid in taxes upon your passing.
Avoiding family discord. Often death brings about the worst in people. When wishes are not clearly stated and given proper legal effect through planning, distrust, doubt and animosity can arise, destroying personal relationships and adding unnecessary costs and litigation to administering a decedent’s estate.