Five Surprisingly Common Planning Mistakes Baby Boomers are Making in Droves

Baby boomers – the first generation tasked with the responsibility of planning for and funding their golden years. This generation, which includes those born between 1946 and 1964, have entered and continue to enter into retirement. As they make this financial transition into retirement, many are learning that they have made some of the most typical retirement mistakes.

But, even if you’ve made a financial mistake or two, there’s still time to avoid these five surprisingly common planning mistakes baby boomers are making in droves.

Mistake #1: Believing Estate Planning is Only for the Wealthy

While baby boomers are not the only ones guilty of this mistake, the common misconception is that only the ultra-rich need to have an estate plan prepared. By some reports, about half of Americans between the ages of 55 and 64 do not even have a will. Because estate planning encompasses not only protection of your assets (regardless of how much you’ve accumulated), but also your healthcare choices, the lack of planning can leave you in a dire situation should any medical issues arise.

Mistake #2: Checklist Mentality

For many, estate planning is just the preparation of legal documents. Once the documents are signed, the client crosses off the item from his or her to-do list and moves on. But, your circumstances may (and usually will) change. And the likelihood of this happening increases the longer time goes by. To ensure your estate planning objectives are carried out, you should update your estate plan every time a major (or minor) life change happens, such as retirement.

Mistake #3: Not Completing Your Estate Planning Homework

Just because the estate planning documents have been signed does not necessarily mean that the planning is complete. It is important that any assets that need to be retitled are done so as soon as possible, before you forget. If the ownership or designations on financial accounts and property do not align with your estate planning strategy, there can be major problems in the future. Improper titling of financial accounts or property can result in an unexpected or undesirable distribution. This can happen because you may make one plan through your will or trust, but the ultimate determination of who inherits will rely on the ownership or beneficiary designation of those assets upon your death.

Mistake #4: Leaving Out Little (And Not So Little) Things

It is important to consider all forms of property, not just the high-value assets when putting together an estate plan. Some of the most commonly overlooked assets include digital assets and family pets. If not expressly addressed in your estate plan, your family may end up fighting over valuable assets, abandoning those they deem worthless, or not even realizing certain assets existed.

Mistake #5: Not Preparing for Life Events & Emergencies

No one has a crystal ball. However, with proper estate planning, you may be able to weather the storm brought on by some of life’s unexpected events or emergencies. With long term care costs increasing year after year, planning for the future possibility of a nursing home can save you money and reduce worry if the time comes.

Estate Planning Help

Although many baby boomers have made these mistakes, you do not have to be one of them. Consult with us to learn about estate planning options and to make sure you and your family are protected from these common mistakes.

Call today for a free consultation in office or by telephone.

Ben E. Connor, Esq.
The Connor Law Firm, PLC
Scottsdale, Arizona Office:
800-679-6709 (toll free)
480-296-2069 (local)
St. George, Utah Office:
800-679-6709 (toll free)
435-359-1414 (local)
Ben@ConnorLegal.com
www.ConnorLegal.com

Are You Cooking a Big Pot of Spaghetti to Dump on Your Loved Ones – Or Are You Expertly Planning the Preservation and Disposition of Your Estate?

In the event of your untimely death, your beneficiaries are highly dependent on how you planned your estate.

Generally, you have two types of property. First, you have property with a title that says you own it. Second, you have property that has no title — you know you own it because you possess it. Property with title includes vehicles, boats, airplanes, real estate, bank accounts, savings bonds, life insurance policies, retirement accounts, and stock certificates. If you die without a will or a trust and haven’t used any beneficiary or transfer on death options, state law will determine who inherits property with a title. On the other hand, property without a title, such as jewelry, antiques, art, and even your digital assets are usually provided for in your will or trust, and if you don’t have one they typically will go to your heirs at law as a residual distribution (interpretation — stuff wars among your heirs). So just imagine that priceless diamond ring or your treasured coin collection going to that annoying niece or nephew that was always rude to you. Whoever is most persuasive or can argue the most get it. On the other hand, both Arizona and Utah have state statutes which allow you to prevent such “stuff wars” if you have a property drafted Will or Living Trust. As you can see, who you have listed as a beneficiary — or not having a beneficiary designation at all — can have serious implications for your family after you have passed away. So what are you preparing, or not preparing? Is it a well-organized plan or a big pot of spaghetti that is going to be symbolically dumped on your loved ones heads? You are in control. You decide.

Increasingly, a wide range of financial products allow you to name a beneficiary upon your passing. The benefit of naming a beneficiary is that the assets go directly to the named beneficiary upon the account owner’s passing, often bypassing the long and expensive process of probate. The danger is, however, that when these designations are not carefully coordinated with your estate plan you can inadvertently disinherit a loved one, cause a disabled family member to lose government benefits, leave your heirs with a massive tax bill, or otherwise fail to achieve your goals. However, remember that for such a beneficiary designation to work, you must be dead. What if you haven’t died, but are incapacitated? Then the beneficiary designations do not work because, as already stated, beneficiary designations only take effect only upon your death. However, if you have a Living Trust, you can be incapacitated and have someone of your own choosing take care of you and your assets.

What is a Beneficiary Designation?

Simply put, a beneficiary designation is a contractual agreement where the bank, insurance company, or financial company agrees to pay a person or entity, that you have selected, the specific assets upon your death. For example, Bob may list Susan, his sister, as the payable on death (POD) beneficiary for his savings account at ABC Bank. When Bob dies, ABC Bank will pay Susan the balance in Bob’s account, without Susan having to first go to probate court. Nice for Susan, not so nice for Bob. My advice — don’t depend on beneficiary designations — where possible put your assets into a Living Trust so that you can be protected while living.

Estate Planning Help

The best strategy for ensuring your wishes are carried out is to first understand the benefits and differences between having no controlling documents, or having a Will, or a Living Trust, and certain beneficiary designations. We are here to help you coordinate all of your assets and beneficiary designations with your estate plan so that you can protect the one’s you love.

Call today for a free consultation in office or by telephone.

Ben E. Connor, Esq.
The Connor Law Firm, PLC
Scottsdale, Arizona Office:
800-679-6709 (toll free)
480-296-2069 (local)
St. George, Utah Office:
800-679-6709 (toll free)
435-359-1414 (local)
Ben@ConnorLegal.com
www.ConnorLegal.com

Four Simple Estate Planning Truths

First: No one wants to die.

Second: After we die, we want our assets to go to our loved ones — not to predators of a surviving spouse; creditors of a surviving spouse or children; divorcing in-laws; or judgement liens.

Third: We must take affirmative steps so that our loved ones are protected against those who want to take our assets from our loved ones.

Fourth: If we get our estate planning done, we will have less stress and, hopefully, live longer.

Here Is A “Must Watch” 90-Second Estate Planning Video at www.connorlegal.com.

Does My Estate Plan Need to Include My Vacation Property?

Yes! If you own a vacation home, timeshare, investment property, or any other asset outside of the state where you are domiciled you must make sure it’s included in your estate plan. If you fail to include these in your estate plan, or fail to have an estate plan at all, your heirs will encounter issues, and usually the expense and hassle of court costs, when inheriting these assets.

Because state laws vary, your principal residence may even be divided one way in your home state while other properties – such as vacation homes, time shares, or other pieces of out-of-state land – can end up divided completely differently. Of course, having a comprehensive estate plan puts you in control and lets you determine who will receive your property, regardless of where it’s located.

Avoiding Unnecessary Probate

When property is located in a different state than where the deceased person was domiciled, your family may need to file a second probate case, referred to as an ancillary estate. Typically a local attorney must handle the ancillary estate, which adds more cost, time, and hassle for your family to settle your affairs. For example, if you died as a resident of Arizona or Utah but owned property in Montana as well, you might have an ancillary probate in Montana for the property located there.

Probate is the legal process that is used to change title of property upon their passing, whether the deceased had a will or not. Each state has their own probate rules, making it fairly complex for families that inherit property in multiple states. It is important to know that while personal property may be probated in the state where the decedent is domiciled, real property must be probated in the state or country where it is located.

The need for ancillary probate can be avoided, however, through proper estate planning. Specifically, if the decedent transfers the property to his or her revocable trust before death, ancillary probate can be avoided. Of course, there are several ways to avoid the costs, delays, and headaches of probate other than a trust, but each alternative has downsides. One way is the title the property jointly with your spouse or, alternatively, jointly with another individual. The property must be titled in a particular manner to avoid probate so that it automatically goes to the survivor. But this can make refinancing difficult, say if you name a child as a joint owner, and can also cause unnecessary taxes to be due.  The result of using a revocable trust will likely be a saving of money, time, and hassles for your heirs.

Bottom Line

Intestacy laws can be complicated because they vary from state to state. At the same time, a well thought out estate plan avoids unnecessary probate costs, in every state where you own property. With the help of a knowledgeable estate attorney, you can successfully avoid unnecessary complication and make settling your affairs as easy as possible for your heirs.

Remember to tell your estate planning advisor about everything that you own – no matter how small in value or where it is located. This is because in order to fully protect your family and assets, all of your property (real and personal) must be included. If you have any questions about ancillary probate, or any other estate planning issues, contact us today.

Call today for a free consultation in office or by telephone.

Ben E. Connor, Esq.
The Connor Law Firm, PLC
Scottsdale, Arizona Office:
800-679-6709 (toll free)
480-296-2069  (local)
St. George, Utah Office:
800-679-6709 (toll free)
435-359-1414 (local)

Ben@ConnorLegal.com
www.ConnorLegal.com

Estate Planning Isn’t Spooky! But not planning can be downright terrifying.

The idea of implementing an estate plan might be one of the scariest things you have to confront as an adult. But estate planning doesn’t have to make chills run down your spine. On the contrary, estate planning is empowering for both you and your family and allows you to live confidently knowing that things will be taken care of in the event of your passing or incapacity. Remember, estate planning is not just for the ultra-rich. If you own anything or have young children, you should have an estate plan. Read below to find out reasons why.

Benefits of Estate Planning

Proper estate planning accomplishes many things.  It puts your financial house in order. Parents designate a guardian for their minor or disabled children, so they’re raised by someone who shares your values and parenting style (rather than whoever some judge picks). Homeowners can make sure their property is transferred to a designated beneficiary in the event of untimely death. Business owners can ensure the enterprise they’ve worked so hard to build stays within the family.

Yet, according to WealthCounsel’s 2016 Estate Planning Literacy Survey, only 40 percent of Americans have a will and just 17 percent have a trust in place. This translates to a majority of American families not being adequately protected against the eventual certainty of death or the potential for legal incapacity.

When it comes to estate planning, knowledge is vital. Less than 50 percent of those surveyed by WealthCounsel understood that an estate plan can be used to address several concerns – financial or non-financial matters – including health decisions and guardianship, avoiding court and preempting family conflicts, as well as taking advantage of business and tax benefits.

Estate Planning Horror Stories

Legal disputes over estate plans and wills – or, usually, the lack of having these in place at all – are common. These conflicts can cause harm to family relationships and be financially burdensome. Disputes among the rich-and-famous often made headlines.

Some scary outcomes of inadequate or non-existent estate planning include:

– Prince, who died without a will, leaving lawsuits and hefty lawyer’s fees for his family;
– Whitney Houston, whose failure to update her will negatively affect her daughter Bobbi Kristina’s inheritance;
– James Gandolfini, who didn’t finish planning causing his estate to be hit with unnecessary and easily avoided death taxes;
– Michael Jackson, who set up trusts for his children but never funded them resulting in a multiple probate court battles; and
– Philip Seymour Hoffman, who never set up trusts for his kids causing their inheritances to be unnecessarily taxed.

These horror stories are not limited to wealthy celebrities. WealthCounsel’s survey found that more than one-third of respondents know someone who has experienced or have themselves suffered family disputes due to the failure of an existing estate plan or inadequate will. Additionally, more than half of those who have established an estate plan did so to reduce family conflict. Preserving family harmony is for everyone – not only for the wealthy or celebrities.

Attorneys: Your Guide to Not-So-Spooky Estate Planning

Estate planning can be confusing as each circumstance is unique and requires different tools to achieve the best possible outcome. Nearly 75 percent of those surveyed by WealthCounsel said estate planning was a confusing topic and valued professional guidance in learning more – so you’re not alone if you aren’t sure where to begin.

We’re here to help. An estate planning attorney is essential in determining the best way to structure your will, trust, and estate plan to fit your needs. If you or someone you know has questions about where to begin – contact us today.

Call today for a free consultation in office or by telephone.

Ben E. Connor, Esq.
The Connor Law Firm, PLC
Scottsdale, Arizona Office:
800-679-6709 (toll free)
480-296-2069  (local)
St. George, Utah Office:
800-679-6709 (toll free)
435-359-1414 (local)

Ben@ConnorLegal.com
www.ConnorLegal.com

How an IRA Fits Into Your Estate Plan

When you think of IRAs, you probably think of retirement. But what happens to your IRA money after you’re gone? The answer depends on how you go about creating your estate plan and selecting beneficiaries, and you might be surprised to find out that your money could end up with the wrong people or cause an unexpected tax bill if you don’t take action ahead of time.

What Your IRA Means For Your Estate Plan

Individual retirement accounts (IRAs) are often one of the biggest financial accounts you invest in over the course of your lifetime. When you’re working on your trust, will, and other documents contained in your estate plan, you have to consider all the “big stuff” like your IRA, your house, and your small business, to name a few. But unlike the way we may use some trusts for your family, IRAs have limited lifetime planning opportunities.

IRAs are also subject to income tax (yes – even one you inherit), even though the estate tax or death tax only applies to large estates over $5.49 million. Leaving your IRA to a spouse is a common choice, but you can’t assume that your IRA will automatically be distributed to your surviving spouse. Your spouse must be explicitly named as its beneficiary through a proper beneficiary form.

Common IRA Mistakes

One of the most common mistakes people make is letting their IRA beneficiary forms become out of date after a divorce, the birth of a child or grandchild, or another major life event that would alter their choice of beneficiary.

Another misstep to avoid is naming your own estate as the beneficiary of your IRA. If you name a beneficiary such as your spouse or child, they’ll be in the position to make that money grow into even more wealth over time by using the so-called “stretch out” feature of these accounts. If your own estate is the beneficiary, the money will be passed onto your loved ones in as little as five years (and possibly even faster), resulting in greatly accelerated (and often higher) taxation and a halt to the IRA’s potential growth over time. A bad result all around.

If you decide to leave your IRA to your minor children, you can cause a less-than-ideal situation by forgetting to appoint a guardian to oversee the IRA until your kids are old enough to inherit the IRA. Without a guardian, IRAs left to underage children can end up going to exes or other people you might not wish to share your wealth with. Better than a guardian, you can create an IRA trust to receive the IRA distributions, providing long-term financial support for your children or grandchildren and protection against meddlesome exes or others you don’t want to be involved in your children’s inheritance.

IRAs and Estate and Income Taxes

It’s important to sit down with an estate planning attorney to determine how your IRA will be taxed and plan accordingly. For those with large estates, a life insurance policy and life insurance trust could be taken out to offset the cost of those estate taxes for your beneficiary. Remember, in addition to estate taxes for those with a large estate, your IRA distribution will also trigger an income tax for your recipient, regardless of the size of your estate. Roth IRAs are an exception to the income tax for beneficiaries. Whether a Roth IRA makes sense is something you can explore with us, your tax advisor, and your financial planner. Like many legal, tax, and financial strategies there are no one-size-fits-all solutions.

Because of the estate and income taxes that occur when IRAs are passed on to beneficiaries, they’re an excellent way to include some charitable giving as part of your estate plan. If you donate your IRA value to a charity, you’ll have a charitable contribution deduction as well as the ability to bypass loss of the IRAs value through income tax. If you are interested in benefiting your church or another charitable goal, it’s always an excellent idea to bring this up with us as your estate planning attorney and with your financial advisor as well, so we can help you build a plan that lets you give back.

Turning Even a Modest IRA into a Huge Advantage For Your Family

One way to make the most of an inherited IRA is to take a stretch-out approach. This strategy lets your beneficiary stretch the length of time over which they’ll be collecting money from the IRA, giving it more time to accrue growth without income taxes eating away at it. When this is paired with a retirement trust, the result can be a huge, long-term inheritance for your family, even if your IRA is only a modest amount. This is just one of several ways you can work with estate planning attorneys to make sure your loved ones get the most out of your hard-earned wealth for years to come.

Even though passing your IRA to your spouse or onto the next generation may seem relatively straightforward, there are plenty of pitfalls along the way without the guidance of an expert. Get in touch today, and we’ll review your current IRA beneficiary forms to make sure everything is up to date and works to achieve your goals.

Call today for a free consultation in office or by telephone.

Ben E. Connor, Esq.
The Connor Law Firm, PLC
Scottsdale, Arizona Office:
800-679-6709 (toll free)
480-296-2069  (local)
St. George, Utah Office:
800-679-6709 (toll free)
435-359-1414 (local)

Ben@ConnorLegal.com
www.ConnorLegal.com