3 Estate Planning Mistakes You Don’t Want To Make

1. FAILING TO NAME CONTINGENT BENEFICIARIES

Life’s uncertain. We’d like to believe everything will go as planned, but it’s possible that your primary beneficiaries may predecease you. If that happens, you should always have alternate or back-up beneficiaries in place.

Also, it’s best to make a habit of reviewing the beneficiaries on your financial accounts on a consistent basis. You may be surprised to learn that you haven’t updated your retirement accounts or life insurance policy since before you got married (or divorced).

2. GIFTING YOUR HOME TO MULTIPLE CHILDREN OR BENEFICIARIES

 Every parent wants to believe that their children will take care of how to divide up property after he or she is gone. In the parent’s mind it may seem silly to get into the details and logistics in their Will or Trust. However, by deferring this task to your children (or other named beneficiaries) you open the possibility of creating a huge family conflict.

For example: one child wants to sell right away to help pay for their kid’s wedding, another child is in no financial rush and wants to hold onto the property until the market recovers, a third wants to rent the property, and a fourth child just went through a divorce and needs a temporary place to stay.

I think you get the point.

3. LEAVING ASSETS DIRECTLY TO A MINOR

Similar to common mistake #1, you should carefully think through contingency plans involving younger beneficiaries. If your primary or alternate beneficiary is a minor or under the age of 21 then you may want to specify the assets to be held in a custodial account as long as possible (21 in MA).

If it’s a particularly large inheritance, you may take it one step further by considering whether the current parent/guardian of the minor beneficiary is well suited to handle the money or if you would prefer a third party to handle the financial side of things.

And, if 21 seems too young for someone to inherit a portion of your estate, then you can set up a trust to delay that age to one that makes more sense for you. You also would have the added flexibility of having multiple distribution dates (e.g., one-third at 25, one-third at 30, and so on).

If you have any questions about common estate planning mistakes or about estate planning in general, then please feel free to contact Joseph Lento at Perennial Trust by calling (781) 202 – 6368 or emailing jlento@perennialtrust.com. You can also download our Free Estate Planning Guide. Thanks for reading!