Munoz Minute

Posted by on March 21, 2015 - 7:02 am

Bob Munoz is a advisory board member to Trinity, my personal attorney and other than a current suffering NJ Devils fan, an okay guy. Below is a comment of his on estate planning 101, which I can’t begin to tell you how many people I meet who haven’t even taken that step yet.

“Most people believe that preparing a will and planning an estate is a simple task. As a result, they fail to seek special help or simply download a form and prepare their own documents. This casual attitude can result in devastating and costly mistakes that remain undetected until the administration of a decedent’s estate.

In this age of 401(k)’s, IRA’s, pension and option plans, insurance and substantially increasing real estate values, preparing an estate plan requires much more attention to detail than one might think. Preparing a proper estate plan may require a team consisting of a tax attorney, financial planner and accountant as well as health related professionals.   Recently, reports have been appearing in the media regarding common mistakes that occur when individuals fail to take action in preparing an estate plan or carrying out the intentions of the plan. One of the most common mistakes includes failure to properly title assets so the decedent’s intention as stated in the will can be carried out and not subverted. Another common mistake is the failure to name more than one beneficiary of an asset such as an insurance policy, IRA’s or 401(k)’s.

We have also noted various errors in the selection of the wrong executors or trustees as well as the failure to designate final beneficiaries so that the assets do not pass through intestacy. The result could be the opposite of the intentions of the testator.

Another common mistake is the failure to take advantage of legal tax shelters. Often the estate of a couple that could pass without paying any death tax ends up taxed. While a surviving spouse may be satisfied to learn that there was no tax due when all of the property was left to that spouse, the spouse may be equally dissatisfied to find out that substantial taxes will be levied against their estate when the spouse leaves it to the children or other beneficiaries.

Everyone should remember to keep proper records. This includes retaining copies of all beneficiary designations. Since banks are constantly being taken over and financial companies disappear from time to time, copies of beneficiary designations should be retained so that there is no confusion at the time of the estate administration. The absence of the beneficiary designation at the time of administration could result in the asset becoming a part of the residuary assets of the estate or ending up in the wrong hands. One should keep the copies with other important documents such as deeds and insurance policies. Last, but not least, someone needs to know where the documents are located.

These are just a few of the more common mistakes and some ideas on how to avoid them. These problems can cause a disposition contrary to the intent of a decedent. Yet, with a little professional guidance, they can be avoided. ”



Posted in: Matters of Finance
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