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Should I Create My Will or Designate Beneficiaries First?

July 25, 2018

Filed under: Beneficiaries — Neel Shah @ 9:15 am

If you have a limited period of time or if you are concerned about accomplishing your estate planning tasks in a particular order, there are certain things you can do to make things easier on you as well as your loved ones. One of the first and most important tasks you should do is to designate beneficiaries on your financial accounts. 

Certain bank accounts, retirement accounts and life insurance policies require you to designate a beneficiary. It is strongly recommended that you name a contingent as well as a primary beneficiary. This is because if something happens to the primary beneficiary, another person is able to step in and receive these assets right away.

Although it might seem very basic to designate beneficiaries in comparison with putting together a will, but designating beneficiaries is often more powerful than the will process because you can help to ensure that those assets don’t go through probate. Many people probably don’t know that many of the brokerages in the United States will allow you to attach a transfer on death instruction associated with your non-retirement account.

Transfer on death deeds can be used in real estate that is located in 27 different states. Consult directly with your experienced estate planning attorney to figure out what applies to you. After you have done this, you will want to outline all of your liabilities including your credit card debt, your mortgage and your loans. A contact list of people that your family members can reach out to for assistance is also strongly recommended.

Any of the professionals that you have used in the planning process such as your insurance agent, your attorney, your accountant and your financial advisor should all be included on a contact list with their name, business, contact details, and what services they provided. Even if you do already have an estate plan, it’s a good idea to work with an attorney on the estate planning process because you can avoid most common missteps and obstacles.

What Happens If You Rely on Beneficiary Designations Alone to Transfer Your Assets?

June 26, 2018

Filed under: Beneficiaries — Neel Shah @ 9:15 am

Are you concerned about what will happen to your assets after you pass away? If so, you may be ahead of the curve of many people who have not even contemplated the benefits of estate planning. However, updating your beneficiary designations alone, doesn’t always mean that you are fully covered with regards to protecting how these get transferred. estate-planning-bene-forms

Assets that are transferred at death via appropriately completed beneficiary designations affect many different types of assets. All of your documents should be updated with your underlined goals in mind which means addressing not just the beneficiary designation forms but also all of your other legal documents, including your power of attorney, healthcare proxy and existing trusts.

There is no doubt that divorce represents a significant upheaval of everything you have come to know, however, an estate planning attorney can help you navigate these complexities and ensure that you have a plan to address all of the relevant issues linked to ending your marriage.

In addition to your beneficiary forms, keep on track with all of your goals for your estate planning in general, including updating your will and your trusts.

 

Most Common Estate Planning Mistakes Related to Beneficiaries

February 28, 2018

Filed under: Beneficiaries — Laura Pennington @ 9:15 am

Far too many people make mistakes related to their beneficiaries on their bank accounts, retirement accounts or life insurance policies. These mistakes usually end up being a problem after the fact for your loved ones when they are not able to receive the assets and benefits that you intended. 

There are seven common mistakes that can easily be avoided by conducting an annual review of your estate planning documents with an experienced estate planning attorney. Far too many of these mistakes can be easily avoided with a little bit of regular review and more often than not, the planning mistakes relate to situations in which you haven’t updated your materials after a major life change. The biggest mistakes include:

  •   Not naming a beneficiary at all.
  •   Naming your estate as the beneficiary of your retirement plan.
  •   Having outdated beneficiaries.
  •   Naming a special needs loved one as a direct beneficiary.
  •   Naming a minor as a direct beneficiary.
  •   Naming a child as the co-owner of an investment or deposit account.
  •   Naming separate children or just one beneficiary for separate accounts.

These can all lead to catastrophic problems for your loved ones down the line and should be avoided with the help of an experienced lawyer.

What’s the Difference Between Primary & Secondary Beneficiaries?

March 23, 2017

Filed under: Beneficiaries — Neel Shah @ 9:15 am

When you fill out important forms with your IRA, 401(k) or your life insurance policy, you may be asked to distinguish between a primary and a contingency or secondary beneficiary. Your primary beneficiary is the individual who is first in line to receive any account assets after you pass away. 

The secondary or the contingent beneficiary may be eligible to get the remaining account assets so long as there are no other surviving primary beneficiaries when you pass away. If you name your spouse as the primary beneficiary, for example, and your children are listed as secondary beneficiaries, the children will only be entitled to inherit assets if the spouse passes away before you do, or if the spouse does not claim entitlement to those assets. You can designate a charity, trust or another entity as your primary or secondary beneficiary.

You may get divorced or experience other life changes that prompt an update in your primary or secondary beneficiaries. When this happens, make sure you do more than contact your estate planning lawyer. While that’s certainly essential for any documents and plans you already have with your attorney, it’s also important to contact your bank and life insurance policy about any accounts where they maintain separate beneficiary info. This is crucial for updating all your materials and ensuring that if something happens to you that everything is recorded accurately. Otherwise, your wishes may not be carried out.

Make sure that you talk to your estate planning attorney to ensure that your designated trust has all the necessary legal requirements structured if you choose to designate a trust as a beneficiary for your retirement account. You may choose multiple primary and secondary beneficiaries depending on your individual needs. Make sure that you keep these forms updated on a regular basis as life circumstances change.

 

Getting Remarried? It’s Time to Update Your Estate Plan

November 28, 2016

Filed under: Beneficiaries — Neel Shah @ 9:15 am

Although there are many different things on your mind as you approach your big day and updating your estate plan may not be one of them, it should certainly be if your upcoming nuptials is not the first time you have been married or in the event that you have children from a prior relationship.

According to a Pew Research Center report, up to 40% of marriages in 2013 were a remarriage for one or both partners. It is even more common, unfortunately, to have estate planning that does not measure up. Approximately two-thirds of individuals don’t have a will in the United States at all and nearly 10% have one that is completely outdated. Out of date documents can be even more troubling in the event that you are getting remarried as this could put your former children or your new spouse in a difficult situation.

Getting remarried is the perfect opportunity to set up a consultation with an experienced estate planning attorney to protect you. Getting remarried makes it all the more important to review your existing documents and update beneficiary information and consider whether you have other estate planning strategies that are no longer useful for you.

 

When an Inheritance Passes Outside the Family, What Concerns Are Raised?

September 20, 2016

Filed under: Beneficiaries — Neel Shah @ 9:15 am

Any time that someone who is not related by blood is named as a beneficiary of an asset, lawsuits are a potential concern. When you are thinking about giving assets to someone who is not a relative, you need to be extremely careful and consult with a knowledgeable attorney.

One of the primary reasons that red flags are raised about leaving assets to anyone outside of the family has to do with elder financial exploitation which has been on the rise in recent years. Even in the event that a beneficiary or even the person granting the gift has pure motives, this could still raise questions when the estate is being probated.

Naming someone other than a natural heir as an estate beneficiary can bring forth a wide range of emotions from confusion to suspicion to anger especially because the majority of individuals in America will leave behind assets to a charity or loved ones who are related by blood.

One of the best ways to address this situation if you do plan to leave assets to someone outside the family is to have someone stipulate to your mental capacity at the time of making the will. Consulting with an experienced New Jersey estate planning attorney to ensure that your document is legally valid is essential as well.

Married Without Children? An Estate Plan Can Help You Give Back

October 23, 2014

Filed under: Beneficiaries,Charitable Giving,Distribution of Assets,Estate Planning,Estate Planning without children — Tags: — Neel Shah @ 9:38 am

If you are married but do not have any children to pass down your assets to, look at estate planning as your opportunity to do something unique and special with your plans. There is nothing wrong with not having children, and it actually gives you a chance to give back in other, meaningful ways.

There may be other people, outside of immediate children, who could benefit from your estate. This can include nieces and nephews, grandchildren, siblings, or even pets. Take some time to consider any special people in your life who might benefit from such a gift. If you have lost a child, you might even consider putting together a scholarship foundation or other organization that can carry on that child’s legacy in your absence.

You may also want at least some of your assets being passed down to charity. Have a conversation with your spouse about the causes you care about the most and how you’d like to see funds distributed. Your giving can really help nonprofits that are in vital need of donations.2014-10-20_1444

Leaving a legacy is one of the biggest benefits to putting your estate plan together, whether you have children or not. If you’re ready to talk over your options, contact us at info@lawesq.net or over the phone 732-521-9455

Lessons from the Joan Rivers Estate

September 30, 2014

Filed under: Asset Protection Planning,Beneficiaries,Estate Administration,Estate Planning For Business Owners,Estate Taxes,Home Probate,Pets,Probate,Trusts — Tags: — Neel Shah @ 9:28 pm

Joan Rivers was heralded as a stellar performer, but she also left behind a legacy as an incredible businesswoman. Her estate included income, collectibles, and real estate that was estimated in value between $150 million and $250 million. She left behind detailed instructions for her assets after her death, which is rare in a society when many celebrity deaths highlight the weaknesses of their estate plans. Photo Credit: breitbart.com

Looking at her careful planning, there are a few key lessons: be prepared for the unexpected, outline plans for pets, and correctly title the assets. Joan Rivers was also masterful in giving her family a brief overview of the estate plans to help improve clarity and reduce the possibility of arguments. Rivers made use of family trusts to reduce the tax burden for her beneficiaries and titled her assets

appropriately to allow for the smooth transition of business assets. This act alone helped to diminish her capital gains taxes.

Regardless of the size of your estate, proper planning allows you to pass on assets to your heirs in the most efficient manner while minimizing the tax liability. Contact our offices today for a consultation for your business and personal needs through email at info@lawesq.net or contact us via phone at 732-521-9455.

Newlywed Estate Planning

August 6, 2014

Filed under: Beneficiaries,Blended Families,Divorce,Estate Planning — Tags: , , , — Neel Shah @ 3:41 am

While there is a great deal to celebrate getting ready for your wedding, don’t neglect this excellent opportunity to delve into your estate planning as well. Unfortunately, as you may already know, accidents can happen at any time. Of course we all hope that nothing impacts your new family and celebrations, but it is critical that you discuss your plans with your new spouse and outline your plans early. Remember that it will be much easier to update them later on once you have decided on the proper documents, but that you should never neglect putting your plan together entirely.

Newlywed Estate Planning

Photo Credit: gogirlfinance.com

You can begin with small steps, like changing your account beneficiaries. This is one of the easiest things to do in your overall estate plan, but there are big ramifications if you’re adding on your new spouse. Do it early. Make sure you update your life insurance, IRA, and 401k accounts, including any others that may have beneficiaries listed in the event that something happens to you.

Your next step should be to look over any wills that both of you have and to ensure that each individual has a solid will reflecting his or her current wishes. Powers of attorney and medical directives are also crucial for new spouses who may be updating their information from the past to reflect their new marriage. For more ideas about transitioning your estate planning to married life, contact us through email at info@lawesq.net or contact us via phone at 732-521-9455 to get started.

Supreme Court Decision: Inherited IRA NOT Protected

July 31, 2014

Filed under: Asset Protection,Beneficiaries,IRA,Retirement Planning — Tags: , , , — Neel Shah @ 3:32 pm

A recent decision from the Supreme Court means there’s no better time than now to review your estate plans and ensure that you have identified the best possible solution for passing down assets to another generation. This new ruling states that inherited IRA funds DO NOT QUALIFY under the category of “retirement funds” under bankruptcy exemption guidelines. Previously, these kinds of funds might have been considered “bulletproof” from creditors, but this new ruling means it could be time to re-evaluate how you’re transferring your assets down to children and other beneficiaries. Is a Standalone Retirement Trust or IRA Trust right for me?

Supreme Court Decision Inherited IRA NOT Protected
(Photo Credit: baltimoretimes-online.com)

According to the Supreme Court, the members of which conducted reviews of the Bankruptcy Code to get more specifics on the situation, inherited IRAs should not count as retirement funds because the individual inheriting the assets cannot contribute to the funds or invest more money into them. Since the IRA also requires that the accountholder draw money from the account, the Supreme Court argued that this would “undermine the purpose of the Bankruptcy Code”.

Each client wishing to establish plans for the future transfer of assets to beneficiaries has their own concerns and situations, which is why it’s so critical that you work with a team of experienced planning attorneys to meet your goals and increase the chances that those assets will be protected and meaningful for the beneficiary. To review trusts and other options for asset transfer, email info@lawesq.net or contact us via phone at 732-521-9455

It’s not all about the cash: Passing on Wealth and Wisdom

May 30, 2014

Filed under: Beneficiaries — Tags: , , , — Neel Shah @ 1:14 pm

It might feel overwhelming to put together your estate plan, but it’s a good tool for you as well as your children. Taking care of your needs early on can encourage children to plan for the long term and to consider their own estate plans. One of the biggest hurdles with regard to estate planning, in fact, is that there’s a general stigma when it comes to talking about money. Simply setting aside some time for the conversation is a valuable process.

Its not all about the cash Passing on Wealth and Wisdom
(Photo Credit: danielharkavy.com)

Many people that estate planning is simply for the management of their assets after they pass away, but that’s simply not true: it plays just as vital a role during your life, too. If you become incapacitated, a comprehensive estate plan will lay out your wishes clearly for your family members and other stakeholders. It’s also a tool that can be used to reduce risk and minimize taxes while protecting wealth- all of which are just as valuable while you are living.

One mistake to avoid in thinking about your estate planning is in seeing your wealth only for what it can do for the next generation in a positive light. Sometimes, there’s another impact that’s often forgotten- what your assets do to them when it comes to unintended consequences. Taxes can take a big hit on the assets if plans are put into place in advance, and gifts may even cause arguments between family members. Not every child, for example, will react the same way to learning that Mom or Dad has left a gift behind.

Estate planning is just as much about your mindset and passing on your wisdom as it is your wealth. To help create a living legacy that makes the most sense for your family, call us at 732-521-9455 or reach us through email at info@lawesq.net .

Banking on an inheritance? Don’t count your chickens before they hatch!

May 14, 2014

Filed under: Beneficiaries,Distribution of Assets,Inheritance — Tags: , , — Neel Shah @ 9:47 pm

New research from the Insured Retirement Institute shows that although nearly two-thirds of older individuals considered leaving an inheritance behind important in the past, those numbers have shifted out of beneficiary favor. According to their report, less than half of baby boomers today believe it’s critical to leave behind an inheritance.

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(Photo Credit: greekweddingtraditions.com)

So, what’s behind this big shift in attitude? Many older individuals and couples want to see that you are capable of handling an inheritance first, taking the following factors into consideration:

  • A pattern of good financial decision-making skills. This doesn’t mean you’re mistake free on your credit report. Parents just want to see improvement and a pattern of it to verify that you’re responsible enough to handle a lump sum inheritance.
  • Understanding of your own financial missteps and accomplishments. Once again, it’s not about being perfect. Some older parents thinking about an inheritance left behind want to know that you’ve made your mistakes, learned from them, and moved on. It’s a sign that you’re growing in terms of financial independence and understanding. If you have a pattern of racking up debt and then struggling to pay it off, however, that’s not a good sign.
  • Debt awareness. Are you making student loan payments? That’s okay, because it was an investment in your future. Credit card debts and big car loans, however, show that you might not be familiar with the right kind of debt- or the right way to pay it off. Both are red flags for parents.
  • Educate yourself. No need for a post-graduate degree here, but certainly some financial education on your own through books, planning, and even videos can be really helpful. Find out your weak spots and work to improve them on your own. This shows ambition and desire, both of which parents love to see.

There’s never been a better time to get started. To discuss your plans for asset protection, tax minimization, and your estate, email info@lawesq.net or contact us via phone at 732-521-9455 to get started.

Discuss Finances Before Saying ‘I Do’

April 2, 2014

Filed under: Beneficiaries,Estate Planning,Finances,Life Insurance — Neel Shah @ 10:00 am

If you or someone you know is planning a wedding anytime soon, there are many things to consider. One of the most important of which is finances. You must discuss money with your future spouse, even if doesn’t sound romantic.

English: A Catholic wedding ceremony in Milwau...

(Photo credit: Wikipedia)

Talking about finances is at least as important as discussing the reception or honeymoon. Maybe more important.

Talking about finances — budgets, insurance, savings and so forth — could be critical to ensuring a happy marriage, says a story on cnbc.com.

Setting a specific time to sit down and talk about how you want to organize your finances after marriage is key. Will you have joint checking accounts or separate ones? Who is going to manage the money and pay the bills? These are just some of the questions that must be asked.

It is also critical to set a budget and put your expenses and financial goals down on paper. It is important that each partner be okay with the other’s spending habits.

If there are disagreements, the couple may want to obtain the advice of a marriage counselor or financial advisor.

Other areas to discuss are life insurance ( a “must” for most couples, according to the article); debt, if there is any;  disability insurance; homeowners insurance; health insurance; and an estate plan, or at least a plan to designate beneficiaries in case of one’s death.

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3 Estate Planning Mistakes From Which To Learn

April 1, 2014

Filed under: Asset Protection Planning,Beneficiaries,Estate Planning,Estate Taxes,Inheritance,Last Will & Testament,Trusts — Neel Shah @ 10:00 am

If you haven’t already done your estate plan, perhaps hearing a few horror stories about people who made common mistakes will prompt you to do it — and do it right.

Last Will And Testament

Last Will And Testament (Photo credit: Ken_Mayer)

An article in the Green Bay Press Gazette, recounts a few cases that detail classic mistakes involving estate planning, or the lack of it.

  • A former Supreme Court justice wrote his own will, using just 176 words. It cost his family $450,000 in estate taxes and court fees because he didn’t take the time to do it right.
  • Lesson: Know what you know, know what you don’t know.

  • A young woman left her assets to her minor son. When she died, she had $1 million in her estate due to a wrongful death claim. Her son died soon afterwards and the money went to his only heir, his father, who was a drug addict.
  • Lesson: She could have put the assets into trust with a contingency plan were he to die, so the money could not go to the father.

  • A father had a stroke and had to go into a nursing home. His children closed his bank account but never went through his mail. After he died, they found a statement for a $1 million life insurance policy. But the premiums had not been paid since the bank account was closed. They didn’t get the money.
  • Lesson: Make sure somebody knows what assets you have, usually the person who has power of attorney, a trustee named in a trust you have set up or the personal representative named in your will.

These are common mistakes that can be avoided if you engage a qualified estate planning attorney to help you with your estate plan.

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How To Handle Leaving Unequal Amounts To Your Children

March 20, 2014

Filed under: Beneficiaries,Distribution of Assets,Estate Administration,Estate Planning,Inheritance,Wills — Neel Shah @ 10:00 am

Many parents divide their assets equally among their children. That’s the easy way.

Family discussion

(Photo credit: Muffet)

But what if you want to give more to one child than to another? Is that fair? Is it a good idea?

Sometimes it may be the best plan. For example, maybe one of your children earns much more than the others. Does this child really need to share equally in your estate?

Maybe one of your children has several children of his own, while the others are childless or have only one child. That may be a good case for giving the child with the most children a larger share.

Another reason might be that one of your children spent a lot of time and energy caring for you in your old age. Shouldn’t that child get rewarded?

And what if one of your children went down the wrong path? Maybe he became addicted to drugs or alcohol. Should this behavior be reinforced?

These are difficult decisions posed in an article in the Wall Street Journal. And they can lead to hurt feelings, lawsuits and other problems.

If you end up giving different children differing amounts in your will or estate plan, your decision may end up being challenged in court by the child or children who got less. It could turn into a mess.

To make sure your wishes are carried out, make sure to prove that you are of “sound mind” when you drew up your plan. You might want to get a letter from your doctor or psychologist saying so.

At the same time, make sure to talk to each of your children and explain what you are doing and why. This could result in fewer bad feelings.

Perhaps you can establish a pattern by helping those who need the most help while you are alive, as well as helping those who help you by giving them financial support during that time.

You can also include clauses mandating that disputes be settled through mediation or arbitration, not litigation. You can even include a “no contest” clause that says if any of the beneficiaries tries to contest the will, that child’s share is forfeited.

These are tough decisions that your estate planning attorney can help you make when drafting your will or estate plan.

 

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Teenager Gets $25 Million Fortune – With One Catch

March 12, 2014

Filed under: Beneficiaries,Current Events,Distribution of Assets,Estate Administration,Guardianship,Inheritance,Last Will & Testament — Neel Shah @ 10:00 am

Actor Paul Walker of Fast & Furious fame, who died in a car accident in November, left his entire fortune of $25 million to his 15-year-old daughter, who had recently left her mother and childhood home in Hawaii to live with him in California.

Paul Walker at the Fast & Furious premiere at ...

Paul Walker at the Fast & Furious premiere at Leicester Square. (Photo credit: Wikipedia)

Walker did not leave a dime to any other family members or even his girlfriend.

But Walker’s will did have one catch. His daughter, Meadow, will not be able to touch the money until she becomes an adult. Nothing unusual there, except that Walker named his own mother to be Meadow’s guardian.

According to an article on cafemom.com, this is a bit unusual and could be tricky. One wonders why he named Meadow’s grandmother as her guardian rather than Meadow’s own mother, Rebecca Soteros.

However, the matter will be decided by a judge later this month. In the meantime, Meadow is back in Hawaii living with her mother.

Walker was a very private person and not much is known about the circumstances of his breakup or the decision to have Meadow come live with him in California.

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Florida Court Ruling Provides Guidance For Those Using Trust For Asset Protection

March 6, 2014

Filed under: Asset Protection,Beneficiaries,Estate Planning,Trustees,Trusts — Neel Shah @ 4:30 pm

A recent appellate court ruling in Florida gives former spouses the legal grounds to take funds from a type of trust that was thought to be unavailable to them.

State flag of Florida

State flag of Florida (Photo credit: Wikipedia)

Discretionary trusts are set up by the wealthy to give a trustee the authority to make or not make distributions from the trust. But the ruling late last year in Florida gives ex-spouses and the children of beneficiaries more leeway to gain access to those funds in certain circumstances.

However, estate planning experts are divided over whether this ruling establishes a precedent for other states, according to an article on fa-mag.com.

In this case, Bruce Berlinger challenged a lower court ruling that allowed his ex-wife, Roberta Casselberry, to obtain funds from a discretionary trust fund after he stopped paying her $16,000 a month alimony. The trust had been paying the money directly to her and not to him.

Usually, a creditor may not garnish funds in a discretionary trust if the trustee does not make the distributions to the beneficiary. In this case, the court ruling the ex-spouse was deemed to be an “exception creditor “and could seek distributions from the trust to satisfy her alimony requirements.

About 30 states have some form of “exception creditor” provision in their trust codes.

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Hoffman’s Will Raises Legal Issues

March 5, 2014

Filed under: Asset Protection,Beneficiaries,Distribution of Assets,Estate Administration,Estate Taxes,Inheritance,Last Will & Testament,Trusts — Neel Shah @ 4:07 pm

Actor Phillip Seymour Hoffman, who died of a drug overdose in February, had not updated his will in years. The mistake could prove troublesome for two of his daughters and their mother.

Philip Seymour Hoffman won a Academy Award for...

Philip Seymour Hoffman (Photo credit: Wikipedia)

The will was signed in 2004 when the actor had just one child, Cooper, now 11. But he subsequently had two daughters, Tallulah and Willa, neither of whom are mentioned in the will.

This may or may not be a problem.

The award-winning actor, who was just 46 when he died, left everything to his longtime companion, Marianne O’Donnell, the mother of his three children. But that’s just the beginning of the story, according to an article on Forbes.com.

Since Hoffman and O’Donnell were not married, she does not get any of the estate tax breaks available to spouses. You can give an unlimited amount to your spouse during life or in an estate plan, with no federal or state tax applied.

Hoffman was worth an estimated $35 million at the time of his death. The federal estate tax exemption is $5.3 million, but the rest is taxed at up to 40 percent. New York has its own estate tax of up to 16 percent for non-spouses, with a $1 million exemption.

In all, Hoffman’s estate will be taxed at more than $15 million. And since they were not married, any assets that remain at O’Donnell’s death would be taxed again.

There may be a way out for O’Donnell, however, The will allows for her to turn down all or part of her inheritance and put it into a trust. Any assets that go into the trust bypass her estate and cannot be taxed when she dies.

But the fact that only Cooper was mentioned in the will, complicates the matter. The will provides that he get half the principal of such a trust when he turns 25 and the other half when he turns 30. However, the law of New York and most states protects children not named in a will that has not been updated from being disinherited.

The article suggests that O’Donnell, who is the executor of the will, should appoint a guardian to represent the two sisters.

Other matters that could complicate matters include if Hoffman had set up a retirement account or a life insurance policy.

But all the confusion could have been avoided if Hoffman had included a clause in the will stipulating that any reference to Cooper includes any other children born after him.

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Review Your Financial and Estate Planning Goals for 2014

January 23, 2014

Filed under: Beneficiaries,Estate Planning,Finances,Gifting,Taxes,Trusts,Wills — Neel Shah @ 7:08 pm

A recent article quoted financial planner Michael Joyce as saying, “There’s nothing magic about reviewing goals […], but it is a good time to refocus people on their financial goals.” Joyce’s statement could not be moretrue. It is good practice to periodically review financial and estate planning goals, and the end of the year or the beginning of a new year is a great time to check this off of the to do list.

English: Picture I made for my goals article

(Photo credit: Wikipedia)

Individuals should begin their review by checking the beneficiary designations on their retirement accounts, life insurance policies, 401(k) plans, and any other account with a beneficiary designation. It is important to not only ensure that a beneficiary has been named, but also that the named beneficiary is still appropriate.

Additionally, review the provisions in your will and trust documents. Consider whether any provisions need to be changed, added, or omitted. This is especially important if you have experienced a marriage, divorce, or the birth or death of a loved one since you first signed your will.

Individuals should also consider any tax law changes that will impact their assets. Tax laws are in constant flux, so a periodic review of applicable laws is the best way to plan to reduce anticipated taxes. This review should also include a review of gift tax limits, which may encourage an individual to increase year-end gift-giving in order to achieve a greater tax benefit.

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The Biggest Estate Planning Mistake You Are Probably Making

January 15, 2014

Filed under: Beneficiaries,Estate Planning,Trusts,Wills — Neel Shah @ 9:00 am

An estate plan is not one document. Rather, it is a collection of various documents that deal with a wide variety of assets, and leave instructions for various situations. An important part of any estate plan is a person’s beneficiary accounts. As a recent article explains, one of the most widespread estate planning mistakes occurs when people fail to update their beneficiary designations.

Beneficiary accounts such as IRAs, retirement accounts, insurance policies, mutual funds, bank accounts, brokerage accounts, annuities, and 529 college savings plans are accounts that are transferred to a designated beneficiary immediately at the death of the account holder.

Importantly, a person’s will or trust does not trump his or her beneficiary designations. For example, if a divorced man failed to take his ex-wife’s name off of his retirement account before he died, the proceeds of the account would go to his ex-wife. This would be the outcome even if he clearly stated that the ex-wife was to be disinherited in his will.

It is good practice to update your beneficiary designations once every few years and after important events, such a marriage or divorce.

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