Mistake #5: Incapacity Issues
On your 18th birthday you are considered an adult American citizen and you become responsible for your own personal, health care and financial decisions. Even your parents become strangers to you, in a legal sense, should you become incapacitated. This same legal strangerhood applies, by the way, between spouses. As a result, every adult American, married or single, must appoint agents through proper Durable Powers Of Attorney to make their personal, health care and financial decisions in the event of their incapacity. Alternatively, a court process involving at least three lawyers will be required to appoint agents to make such decisions for you under the ongoing supervision of the court. And this can be rather expensive and invasive of your privacy.
Mistake #4: Minor Children Matters
Silver and gold aside, if you are blessed with children, then they are your most valuable assets... even if you feel like trading them for S & H Green Stamps at times. If your minor children were orphaned, who would rear them to adulthood and impart your morals and values to them? In some states, only through a Last Will & Testament can you appoint the appropriate guardians (e.g., back-up parents) for your minor children. Alternatively, in those states a court process would be required to appoint them. This court process is not only expensive and public, but the court may not appoint the same parties you would have selected.
Mistake #3: Death & Taxes
Death is a 100% certainty. When it comes to transferring your earthly possessions upon your death, you can either make it easy on your loved ones through proper estate planning, or you can leave it up to the court system by default. Prior planning is, without fail, the more efficient and effective option. There are a variety of planning methods to accomplish this transfer. For example, Revocable Living Trusts are commonly used to transfer assets post-mortem, independent of the legal system in many states. Benjamin Franklin astutely observed that the only two certainties in life are Death & Taxes. And it is settled law that no taxpayer should pay more than his or her fair share in taxes. Unfortunately, the only certainty about the federal estate tax is its long-term uncertainty with each change in Congress and the White House. Accordingly, careful monitoring of the economic, political and legal climate is required. Stay in close contact with your attorney, CPA and financial advisor.
Mistake #2: Inheritance Risks
No one values the worth of a dollar like the person who earned it and paid taxes on it. Have you arranged your estate to impart your work ethic to the next generation and beyond? Careful consideration should be given, therefore, to protecting and preserving an inheritance through one or more Long-Term Discretionary Trusts for your loved ones. Properly structured, such trusts will protect and preserve an inheritance for generations to come from squandering, divorces, lawsuits and bankruptcies. Without proper estate planning, a lifetime of thrift can disappear in a season of conspicuous consumption, or through common personal misfortune.
Mistake #1: Procrastination
According to a recent survey, some 58% of adult Americans lack even a basic will (and, according to anecdotal experience many others have an outdated plan that no longer meets their needs). As a result, these otherwise responsible adult Americans may leave a legacy of unnecessary pain and conflict for their loved ones.
Estate planning is really something you do for the people you love most, because it is easier (and cheaper) for you to take care of it now... than it will be for them to clean up a big old mess later on. But, estate planning is not a "once and done" event. Rather, it is a "process". Things change. Once implemented, your estate plan should be reviewed from time-to-time. We recommend the earlier of every two years or upon the occurrence of a major life event (e.g., marriage, divorce, retirement, death of a spouse, etc.). Life is fragile. Have you made (or updated) your Will and Trust?
IRS Circular 230 Notice and Copyright Information
Note: Nothing in this publication is intended or written to be used, and cannot be used by any person for the purpose of avoiding tax penalties regarding any transactions or matters addressed herein. You should always seek advice from independent tax advisors regarding the same. [See IRS Circular 230.] Copyright (C) 2010 Kyle E. Krull and Integrity Marketing Solutions