Filbrandt Reports

5 Estate Plan Oversights That Can Prove Costly

Volume 18, Issue 12

Executive summary:

In this report you will learn:

  • Five common estate plan oversights that cause plans to fail
  • How a trust can have advantages over a will
  • Even with the federal estate tax exemption increase, many states still have an estate tax
  • What mistake can cause your beneficiaries to pay higher income taxes

This checklist of often overlooked or forgotten aspects of estate plans may surprise you. It may be costly to your beneficiaries if items on the list are not addressed in your estate plan.

1) You don’t have a revocable trust and your heirs have to go through probate.

The purpose of a revocable trust is to avoid the probate process. For many of your assets, probate can be avoided by the use of non-probate transfer methods such as “pay on death” or “transfer on death” or a beneficiary designation. However, these methods may not be available for all assets or may cause unintended consequences such as disinheriting an heir.

2) You have a revocable trust, but it doesn’t own your assets.

The purpose of a revocable trust is to avoid probate. However, if your assets are held in your individual name instead of the name of your trust, it doesn’t work as planned.

3) You haven’t updated your estate plan.

With the increase in the federal exemption, the Tax Policy Center estimates that only 0.14 percent of estates will owe tax. But more than 20 states have a separate estate tax. Your trust document needs to take this into consideration, and the formula to do so may be outdated. Additionally if the “bypass” planning in your trust is no longer necessary, you may save your heirs significant capital gains tax if it is eliminated.

A Power of Attorney is a legal document delegating authority from one person to another. In the document, the maker of the Power of Attorney (the “principal”) grants the right to act on the maker’s behalf to an agent. The requirements governing powers of attorney are constantly changing and vary by state.

A Health Care Power is a document in which the principal designates someone else to make health care decisions. The Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule provides federal protection for personal health information. If your document does not specifically address the act, your agent may have difficulty with access to your medical information.

​4) The person you named to make decisions for you is dead, has dementia, has moved away or is a party that is not authorized to act in your state.

If you haven’t updated your plan after such an event, it may be of little or no value. You should ensure that the parties you have chosen are still ready, able and willing to serve.

5) Your beneficiary designations are outdated.

An outdated beneficiary on an individual retirement account can cause your heirs to pay significantly more in income taxes. To learn more how a trust can benefit your specific estate circumstances, we invite you to contact Filbrandt Private Trust at 800-431-9740. Filbrandt Private Trust is licensed in all 50 states.


Copyright owned by Cannon Financial Institute, Inc. All Rights Reserved. This publication contains general information only, and neither Filbrandt Private Trust, nor Cannon Financial Institute is, by this publication, rendering accounting, financial, investment, legal, tax or other professional advice or services.

Volume 18, Issue 12

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