Articles Posted in Estate Planning

One of the most common estate planning mistakes comes in the handling of beneficiary designations. Many people do not understand that inheriting retirement accounts, life insurance, and other assets that involve a beneficiary designation are different than inheriting from a will. Here are some of the most common mistakes that occur with beneficiary designations as well as steps that you can take to ensure that the retirement money that has been diligently saved will be passed on to the person you intend.

Common Mistakes in Beneficiary Designations

While many people go to an estate planning attorney for help drafting wills and trusts, most do not rely on their expertise for beneficiary designations. As a result, those that you wished would inherit your retirement accounts and life insurance receive less while creditors, former spouses, and miscellaneous relatives could get it all. Here are some of the most common mistakes and misconceptions that lead to problems with beneficiary designations:

A lot of people who have not started estate planning often ask if they really need a will, or if any estate planning is really necessary? Usually, it is followed with a statement about how the children will take care of it, or that the situation is pretty straight forward, so why deal with it. The truth is if you have no children, no spouse, no heirs, and few worldly possessions then you can probably get away with not needing a will. Otherwise, a will and other estate planning documents are very important for your wellbeing and for your loved ones.

Why You Need a Will

One of the most basic tasks a will accomplishes is naming an executor or executrix of your estate. This is the person who will handle all of your affairs after you pass on. This includes gathering all assets of your estate, paying debts or taxes owed, and distributing the remaining property to your heirs. If you do not have a will the court will appoint an executor to your estate. That person may not be aware of what your final wishes were for your property or know what you wanted your heirs to receive.

Comedian and trailblazer Joan Rivers passed away this week, with friends and family saying goodbye at a memorial service in Manhattan. Details about her estate and funeral have not been made public, but it was no secret that Joan Rivers wanted her funeral to be as extravagant as the rest of her life.

In her 2012 book, I Hate Evenyone…Starting with Me, she detailed her wishes for her funeral by writing, “When I die, I want my funeral to be a huge showbiz affair with lights, cameras, action…I want Craft services, I want paparazzi and I want publicists making a scene! I want it to be Hollywood all the way. I don’t want some rabbi rambling on; I want Meryl Streep crying, in five different accents. I don’t want a eulogy; I want Bobby Vinton to pick up my head and sing ‘Mr. Lonely.’ I want to look gorgeous, better dead than I do alive. I want to be buried in a Valentino gown and I want Harry Winston to make me a toe tag. And I want a wind machine so that even in the casket my hair is blowing just like Beyoncé’s.”

However, what may come as a surprise is the federal tax deduction that can come with such a funeral, and how it can apply in other people’s estates.

A number of seniors who are preparing for retirement and estate planning do not have children. Some childless retirees plan on hiring a child – a younger caregiver who will look after them in their old age. Children usually serve as the caregiver and beneficiaries to an estate, and they can typically be relied upon to ensure that their parents’ wishes are taken of. As a result, seniors without children need to take extra precaution when making arrangements for care and estate planning than seniors with children that can double check their plans.

Choose Your Advocates Wisely

You need to make sure that you pick advocates that you can trust with your estate planning needs. An advocate can help with housing arrangements, medical, dental, and financial affairs in addition to estate planning. Your support team can include your spouse, siblings, other relatives, family friends, or a trustee. Make sure that everyone knows who you are relying on as an advocate and what your preferences are regarding all aspects of your estate planning to make sure that your wishes are followed.

When many people begin the estate planning process, they sometimes believe that they are doing the right thing by giving more to one child than the other. One child may be making more money, is more successful, or has married into wealth of his or her own. Parents think that giving an unequal share of the estate to one child over the other is the best way to rectify the situation; however, unequal inheritance comes with hazards that parents may not consider when creating an estate plan.

Punishing Success

By giving one child an unequal share of the estate, it punishes the success of others. In addition, with today’s economic and financial climate the success of one child today does not guarantee it for life. A lot can change over the course of five, ten, or twenty years to your children financially. The more successful child could fall on hard times, and the less successful child could start doing much better financially.

A little more than a year ago, the United States Supreme Court struck down Section Three of the Defense of Marriage Act. In doing so, the federal government gave same sex couples access to the same federal rights as heterosexual couples. Many of these rights involve taxes, housing, Social Security, and estate planning issues. However, more than one year after the decision, many same sex couples are still struggling with understanding the new benefits available to them.

LGBT Benefits Study

In a study released by Wells Fargo, after one year of access to new federal benefits LGBT investors are struggling to make sense of the new legal landscape. In total, 83% of participants surveyed who were LGBT stated that they do not fully understand how new state and federal laws apply to them in the estate planning sector. Of those people, 67% were in legal same sex marriages. However, most troubling is that around forty percent of LGBT investors surveyed believed that the federal government would treat a state sanctioned civil union or domestic partnership just like a marriage, which is not the case.

After nineteen years of battling from probate court all of the way to the United States Supreme Court twice a recent court ruling seems to have ended the battle between the estates of Anna Nicole Smith and Pierce Marshall, for now. Called “The Grand-Daddy of all Estate Battles” these two estates have been battling over the $1.6 billion fortune left by Ms. Smith’s husband and Mr. Marshall’s father, J. Howard Marshall, for almost two decades.

History of the Feud

Federal court proceedings began regarding this estate in 1996 when Anna Nicole Smith filed for bankruptcy in California. The bankruptcy led to a $475 million judgment against Pierce Marshall, but only temporarily. The judgment was reduced to $88 million on appeal, and then appealed again, making to the United States Supreme Court on two separate occasions. After the second trip to the Supreme Court, where the judges rejected Anna Nicole Smith’s claims, it had appeared then, too, that the battle was over.

It is important to consider two different scenarios when planning for retirement and drafting an estate plan. The first thing is to consider what will happen to your estate after you die. However, the second is to consider what will happen to your estate if you live a long life but are not in the best of health and require permanent assistance from others. Creating a comprehensive estate plan can help prepare for both of these scenarios by protecting assets that can either be passed down to heirs or used if you become disabled and need long-term support.

The Need to Plan for Long-Term Care

Most seniors drafting an estate plan today ignore the biggest risk to their estate – needing money for long-term health care. According to the U.S. Department of Health, over 70% of our country’s population over the age of 65 will need some type of long-term care, and more than forty percent will need nursing home care for some period of time.

Some assets are fantastic to hold onto in estate planning but others can be bad for you and your heirs. One of the key objectives when planning your estate is to keep the tax bill as low as possible for your heirs when they are bequeathed portions of your estate. The following is a ranking of the good, the bad, and the ugly of retirement assets that you should leave for your heirs.

The Good

Depleted partnerships: The best asset to keep in an estate plan is also a bit of a head-scratcher. While the taxation of partnerships is complex and at time counterintuitive, there are two important things to keep in mind.

The tragic death and apparent suicide of master comedian Robin Williams has left millions of family, friends, and fans grieving for his loss. Reflecting on his legacy and memory, many people now wonder what is next for his family. He is survived by his third wife, Susan Schneider, to whom he was married for three years, and three adult children ranging in age from 22 to 31 from his two prior marriages.

Williams’ Estate

Robin Williams complained to an interviewer last year about the lifestyle changes he has had to make because of how much money he lost in his previous two divorces. Reportedly, it amounted to around $30 million. He admitted to returning to television, The Crazy Ones, because of bills to pay and listed his Napa Valley property for sale. Public records show that his real estate has significant value. The Napa property, named Villa Sorriso, has been on the market since April for $29.9 million. Williams also owns a 6,500 square foot property in Tiburon, California, valued at around $6 million. After deducting the mortgages on the homes the real estate alone is worth around $25 million.