The 7 Major Errors were listed as:
- Not Having a Plan
- Online or DIY Rather Than Professionals
- Failure to Review Beneficiary Designations or Titling of Assets
- Failure to Consider the Estate and Gift Tax Consequences of Life Insurance
- Maximizing Annual Gifts
- Failure to Tax Advantage of the Estate Tax Exemption in 2012
- Leaving Assets outright to Adult Children
My colleagues Jason Walker and Collins Hunsaker have discussed the first two errors and how to remedy those problems. I will discuss the third major error.
Failure to Review Beneficiary Designations or Titling of Assets
I spend a significant amount of time in probate and guardianship court. Unfortunately, I see first-hand the problems that can be created by failing to review the titling of assets or beneficiary designations. Generally, when a person creates an estate plan involving a trust, title on the assets must be changed and beneficiary designations should be modified or removed. Oftentimes, deeds are required for real property and assignments are necessary to transfer interests in corporations, LLCs, and partnerships. As a general statement, all assets with the exception of qualified retirement plans (such as an IRA or 401K) can and should be owned by a trust. Sadly, in some cases, these changes are never made. In other cases, new assets are purchased and not titled properly in the trust. These oversights can be very costly as correcting the error may require an expensive probate or guardianship proceeding.
This costly error is a simple fix. Each year, you should review all your assets to make sure each asset is titled correctly and has the correct beneficiary named. Statements from your financial institution will usually indicate how title is held. Real property can be checked online through the county assessor’s webpage. If you are unsure how an asset should be titled in your estate plan, contact your attorney for help. A good attorney will be able to help make sure that your estate planning goals are not frustrated because of an error in the titling of assets or beneficiary designations.