Planning ahead is vital to making sure that a person’s loved ones are taken care of after he or she has passed away. Unfortunately, even when a person is careful, he or she can make state planning mistakes that cost his or her loved ones a lot of cash. It is important not to avoid the subject but to discuss exactly how a person wishes for his or her assets to be divided. Those in Washington who are in the process of estate planning should be aware of a few common mistakes.
One mistake that is often made in these circumstances is the lack of see-through provision on a trust. If someone leaves his or her Individual Retirement Account to a trust, for example, the estate could end up owing thousands in taxes if there is no see-through provision. With the provision, the IRS sees the beneficiaries of the trust as the beneficiaries of the Individual Retirement Account. That makes it possible for the beneficiary to pay taxes at an individual rate instead of a trust’s rate.
Another mistake often made in estate planning is leaving pages of the trust document blank or leaving them out altogether. For example, in most trusts, there is a sheet known as the Schedule A, which is an inventory sheet for the trust. It must have a list of all assets that belong to the trust. This sheet cannot be left blank but must be accurate and complete.
Other mistakes made during estate planning include failing to leave the loved ones a list of assets, important papers, deeds, documents, etc. Some also may have too many accounts, complicating their estate. Others may fail to have payable on death or transfer on death instructions on their accounts. An estate planning attorney can explain all of these mistakes to a client and help to ensure that he or she has properly planned ahead. Anyone in Washington who is interested in estate planning may choose to consult with one of these estate planning lawyers.
Source: kiplinger.com, “Some of the Biggest Estate-Planning Mistakes People Make“, Andrew Mcnair, May 25, 2017