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Pros And Cons Of Estate Planning

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During the Middle Ages, crusaders sailing East developed Trusts to protect their families and their assets when they could not. A lot has changed over the centuries, but the essential purpose of estate planning has not. People plan to protect themselves and their families from probate, taxes and costly mistakes. However, without fully understanding the changing legal and financial landscape even a well thought out estate plan can fail. It is critical to plan with skilled legal, tax and financial professionals and to watch out for common pitfalls. If you have already planned your estate or are considering creating a plan these are the seven most common mistakes to be wary of.

Mistake No. 1: Not planning to avoid probate

Many people only have …show more content…

This can attract unsavory attention to a surviving spouse or other family members.

Consider avoiding the expenses and time delays of probate and protect your family with a Trust. A Trust, with you in charge, can own your home and other assets and allow them to pass to your family smoothly and efficiently. It can also build in tax savings and asset protection that a will cannot. It is very important to work with a qualified professional who will help you understand how a trust and other documents should be designed to meet your goals.

Mistake No. 2: Not planning for a …show more content…

The guardian may not be the person you would choose. The most effective way to avoid these unnecessary complications is to plan ahead with a trust and other disability documents that are current and meet privacy standards under HIPPA. A durable power of attorney alone will not be enough, as these documents are often rejected by institutions if they were signed more than one year ago or not on their proprietary forms.

Mistake No. 3: Not planning for the Massachusetts and Federal Estate Taxes.

A trust is an effective way of doubling the amounts that a married couple can pass tax free to their children and grandchildren. While the federal estate tax free amounts continue to change and may drop to $1 million per person in 2011, it is important to consider how the growth of your assets over time will effect your tax situation. The state of Massachusetts also imposes a separate estate tax on all estates over $1 million. Your planning should address both of these taxes, which can be substantial.

Mistake No. 4: Not considering the potential for double taxation on IRAs and other retirement

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