THE BREW – MAY 2024

AVOID THESE 5 COMMON ESTATE PLANNING PITFALLS TO HELP PROTECT YOUR WEALTH

Estate planning is an important part of wealth management, and errors can have significant consequences. Here are five common estate planning pitfalls: ?

1. Not Having an Estate Plan: Failing to create an estate plan altogether is one of the most significant mistakes. Without a plan, state laws will determine who gets your assets and how your assets are distributed, which may not align with your wishes. In some cases, the process may take up to two years, expose your personal information in public records, and have significant legal fees and costs. ?
2. Outdated Documents: Estate planning documents need to be accurate, comprehensive, and up-to-date. Your plan should be reviewed every few years, and updated after significant law changes or life events such as marriage, divorce, births, deaths, or changes in financial circumstances. Failure to do so can lead to unintended consequences, disputes, and potential legal challenges. ?
3. Not Considering Tax Implications: Failing to consider tax implications can result in unnecessary taxes or complications for your beneficiaries. Estate, gift, inheritance and generation-skipping taxes need to be considered in all planning. For estates over $5 million per person ($10 million per married couple) the 2026 federal estate tax sunset provisions may result in your estate being subject to a 40% estate tax. Assets may need to be sold to pay unexpected estate taxes. Understanding tax laws and utilizing tax planning strategies can help minimize tax liabilities. ?
4. Failure to Align Assets with your Estate Wishes: Missing or incorrectly designated beneficiaries on retirement accounts, life insurance policies, and other assets can lead to unintended distribution of assets. A trust is only effective if it's properly funded with assets. Some people create a trust but neglect to transfer their assets into it or forget to add assets to the trust after purchase or refinancing. As a result, those assets may still need to go through probate, defeating the purpose of the trust.
5. Choosing the Wrong Fiduciaries: Selecting the wrong executor, trustee, or agent can lead to mismanagement of assets, conflicts of interest, and disputes among beneficiaries. Requiring multiple co-trustees to act unanimously may lead to friction or halt activities. Failure to nominate an investment advisor or specify investment powers may lead to unintended changes in investment planning strategies. It is essential to choose fiduciaries who are trustworthy, competent, and capable of fulfilling their duties to meet your goals and wishes. ?

Avoiding these estate planning mistakes requires careful consideration, professional guidance, and regular review of your plan to help ensure it remains up-to-date and reflects your current wishes and financial circumstances. To avoid such pitfalls, take one easy step and contact your Advisor today. Our team can help you navigate these complexities and create a comprehensive wealth plan tailored to your needs.

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Disclosures

SEIA is not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Signature Estate & Investment Advisors, LLC (SEIA) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Securities offered through Signature Estate Securities, LLC?member FINRA /SIPC . Investment advisory services offered through SEIA, LLC, 2121 Avenue of the Stars, Suite 1600, Los Angeles, CA 90067, (310) 712-2323. The information provided in this article is for general informational purposes only and does not constitute professional advice. Individual results may vary, and it is important to consult with a qualified professional before making any financial or legal decisions. For details on the professional designations displayed herein, including descriptions, minimum requirements, and ongoing education requirements, please visit seia.com/disclosures . SEIA does not accept time-sensitive, action‐oriented messages or transaction orders, including orders to purchase or sell securities, via electronic mail.