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Dave Patterson and Erin Preston, a father-daughter team of Certified Financial Planner® licensees, provide thoughts and suggestions on a broad collection of personal finance topics.  Information provided in this BLOG is intended to be of a general nature and may not be appropriate for all situations.  Readers should consult with their own financial advisors before relying on any information contained herein.

Tuesday, August 4, 2009

Finished With Estate Planning? Think Again!

So it’s been three years since you met with your attorney. He drew up wills, trusts, powers of attorney, health-care directives and trusts. It was time consuming and rather expensive. But that’s now behind you. You don’t need to think about it anymore! Wrong!

We find that with a high percentage of our clients, a review of their estate plans uncovers numerous problems and/or “to do’s”. In many cases, those issues are related to the implementation of revocable living trusts. Not everyone needs trusts, of course. But if you have trusts, you too may need to address some issues.

Having an attorney create revocable living trusts for you and your spouse is just the first step. You must then take steps to fund the trusts. This involves deciding which assets should go into each trust and then re-titling the assets in the name of the respective trust.

The next most common problem involves beneficiary designations on life insurance policies and retirement plans. In many cases, life insurance policies should designate the insured’s trust as beneficiary. Retirement plans often designate the spouse as primary beneficiary and the trust as secondary. We say “many” and “often” since those are probably the most common cases. Nevertheless, you need to consult with your attorney and/or financial advisor if you are unsure.

Another common problem with titling results from new accounts created after the estate plan was finished. Clients invest in CD’s with several different banks or inherit Aunt Lillie’s portfolio. They title the new accounts in their individual names, instead of their trusts.

A number of other issues can arise that require adjustments to your estate plan. Congress may change the estate tax laws; beneficiaries may die; children marry or have serious issues to deal with; trustees may prove to be undesirable.

All of the above need to be addressed in a timely manner. Make it a point to have your estate plan reviewed every two or three, at the most, or whenever a significant event occurs that impacts your estate plan.


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