Episode #31: 3 Critical Estate Planning Mistakes To Avoid

Today’s Prep:

These are three estate planning mistakes everyone will want to avoid. Regardless of how big or how complicated your estate is, these will impact your heirs if they are done incorrectly.

(Click the featured times below to jump forward in the episode)

Equipping Points:

Not naming secondary beneficiaries

  • [1:57] David shares about a client who named a beneficiary but not a secondary beneficiary. The result eventually led to higher taxes.
  • These kinds of mistakes are easily avoidable. For example, this is a simple change on a form, so make sure with each account you have to go back and check who is listed as a beneficiary.
  • Sometimes your family status changes with new marriages, divorces, or adding children. These are good triggers to check up on your beneficiary designations.

Overlooking per stirpes

  • [6:34] If the beneficiaries in an estate are not listed as per stirpes, the account defaults to living beneficiaries.
  • Per stirpes means that if one of the children is deceased then their portion would pass to their heirs.
  • The default option is per capita which means the inheritance goes to the living remaining next of kin. This cannot be fixed after you are gone, it has to be fixed while you are living. Not handling this important clarification can lead to your money going to someone you didn’t intend.

Having assets go through probate

  • [10:35] If things aren’t properly addressed, your heirs would have to go through probate court to get possession of assets. This is a costly and time-consuming process.
  • Three assets often accidentally left to go through probate are your bank accounts, your cars, and your home.
  • You could ask your bank about a beneficiary designation on your accounts or transfer on death (TOD). You can also put a beneficiary designation on your vehicle.
  • If you have a trust, your home might be owned through the trust. If not, you can make sure your home passes to your beneficiaries with a beneficiary deed on your home.

Today’s Takeaway:


More From David:

The host: David Dickens

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