Link: Morningstar.com: Top 10 Estate-Planning Mistakes. This article by Sue Stevens, CFA, CFP, CPA highlights the top ten mistakes that she has observed in the course of her practice as a financial advisor. Generally speaking, from my experiences I would agree with Ms. Stevens' observations. The areas that can lead to the least desirable results are not updating an estate plan, choosing the wrong trustees and personal representatives, not funding the inter vivos trusts, and not coordinating beneficiary designations. This is not to say that the other areas are unimportant. I single those four areas out because they are rather easy to address with proper reflection and planning.
I would also expand the trustees and personal representatives area to include the appointment of guardians for minor children and agents under powers of attorney. The selection of trusted people to act in these capacities can be very difficult and understandably so. But just because it is difficult, that does not mean it should be avoided. The same can be said for fully funding trusts. It will take some leg work to make sure real estate, bank accounts, and other assets are retitled in the name of the newly created trusts. That is all time well spent. Coordinating beneficiary designations with your overall estate plan ensures that your intentions are fully carried out. This need arises because assets with beneficiary designations, such as life insurance, 401k or retirement accounts, are not distributed according to the terms of your Will or Trust.
It is also worth noting that this list is certainly not all-inclusive. Estate planning involves numerous issues that work together to apply to your unique situation. The best way to ensure that your estate plan addresses these and other issues is to develop a lasting relationship with your trusted advisors, including an estate planning attorney, a CPA and a financial advisor well versed in estate planning issues. Just as one would regular meet with a CPA or a financial advisor for periodic reviews, it is a worthwhile practice to review your estate plan with your attorney every two to five years as circumstances change.
