Estate Planning No-No’s! By Robert J. Silverman, Esq.
Alamo Today ~ February 2015 - Page 23
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It has been a while since I have written about common mistakes people make in the estate planning arena. I think it’s instructive to highlight a number of important “no-no’s” and to comment on positive steps that can be taken to avoid them. 1. Failing to Plan at All! The most critical estate planning error is not to do any! Every adult should establish at least a Durable Power of Attorney, Advance Health Care Directive and Will; and many people would also benefit from a Revocable Living Trust. These are documents that serve very important purposes and will inevitably be needed at some point – we usually don’t know just quite when or how. So, doesn’t it make sense to have them in place, just in case…? 2. Not Obtaining Proper Legal Advice. Time and again, I have consulted with people who are struggling to administer a trust or estate because the decedent (for whose trust or probate estate they are administering) failed to obtain sound legal advice about the estate planning documents her or she signed. “Canned” documents prepared by an inexperienced attorney, prepared by a paralegal at a document preparation service, or purchased online are of very little value without good legal advice about their terms, alternatives, and implications. You know the adage, “You get what you pay for.” In fact, the potential consequences of the lack of expert advice - unlawful, ineffective or impractical documents - can result in inconvenience and administration In Stone Valley Shopping Center fees and costs that are many multiples of what it would have cost to obtain good, professional advice in the first place. 3. Neglecting to Fully Fund Your Living Trust. It is not uncommon for people to establish a living trust, but not adequately “fund” it (formally transfer title of assets into the trust). Having a living trust and not funding it with substantially all of your assets leaves your estate vulnerable to an otherwise avoidable probate and to having Enjoy Our Patio Dining these non-trust assets inherited by people you wouldn’t want to receive them and/or at a time or manner you would not wish. Fortunately, it’s relatively easy to transfer Monday - Saturday: Lunch and Dinner assets into your trust with appropriate instructions and forms. Sunday: Dinner only 4. Not Having Current Beneficiary Designations on File for Life Insurance We Offer a Full Bar and Lounge 3168 Danville Blvd, Alamo Margaritas are a House Specialty and Retirement Plans. People often misunderstand the disposition rules on death that apply to these kinds of assets. Retirement plans (e.g. IRAs, 401Ks) are governed by beneficiary designations – they are distributed to the living beneficiary, if any, who is designated and on file with the financial custodian or insurance company at the time of the participant/owner’s death. And the beneficiary designation trumps whatever your Will or Living Trust might state. Accordingly, it’s imperative that for each such account/policy, you have a current beneficiary designation on file. It’s very wise to also have at least one contingent beneficiary on file – in case the primary designee(s) predeceases you. Frequently, people either don’t have any beneficiary designated; have an out-of-date designation on file; or have only a primary, but not a contingent/secondary designation. This can lead to unintended consequences. I have a client (unnamed and facts changed) who is the beneficiary designated on his recently deceased ex-wife’s $3 million life insurance policy – his ex-wife never submitted a new beneficiary form to the life insurance company after they divorced 10 years ago. So, he will receive the $3 million death benefit (regardless of whether she wanted him to receive it). 5. Nominating the Wrong Candidates for Key Positions. It’s hard to over-emphasize the importance of this one. Whether it is a successor trustee you name in your Living Trust, an executor or guardian in your Will or your agent under a Power of Attorney or Advance Health Care Directive, it’s easy to emotionally or irrationally designate someone who is not suitable or at least not optimal. Many questions should be explored carefully with legal counsel when making these decisions. Does the person you have designated for a given position have the reqServingAlamo&Danville Since 1979! uisite skill set? Will he or she act cooperatively or likely have a conflict with the other family members or loved JUMPSTART the 2015 POOL SEASON! ones who are involved? Does the designee have the time Upgrade Your Pool Equipment and inclination to serve in the applicable capacity? If you name two people to serve together (co-trustees, co-agents, Remodel your Pebble, Tile, and Coping! co-executors, etc.), will they get along and would it make FREE ESTIMATES more sense to name one as primary agent and the other as alternate? Picking the wrong people can wreak havoc Make sure your pool/spa is Drain Cover Safe (Virginia Graeme Baker - VGB compliant). with a smooth succession for loved ones. In-house diver can replace your drain covers. Best prices year-round. Upon request, I’ll be happy to provide you, on a complimentary basis, any or all of the following: i) an “Estate Planning Primer”; ii) a brochure on alInstall a Pentair Intelliflo pump and ternative methods of holding title to property; iii) an save $100 monthly on your energy introductory meeting. bill and get a $100 rebate from PG&E. Mr. Silverman is an attorney with R. Silverman Law Group, 1855 Olympic Blvd., Suite 125, Walnut Creek, CA 94596; (925) 705-4474; email@example.com.
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This article is intended to provide information of a general nature, and should not be relied upon as legal, tax and/ or business advice. Readers should obtain specific advice from their own, qualified professional advisors. Advertorial
Alamo Today, February 2015. The town of Alamo, California's monthly advertiser-supported community newspaper.