Estate Planning Blunders

By: Max Valavanis, CFP®

Estate Planning is a beautiful opportunity to designate who you want your assets to go

to after you pass. Unfortunately, sometimes the results are not what you intend. Therefore, to

effectively pass property to your heirs, it is important to be diligent in creating your estate

planning documents. The following are a few mishaps you could easily avoid.

The most notorious shortcoming of an estate plan is forgetting to update or name

beneficiaries. Far too often I come across a client lacking a valid beneficiary in their IRAs,

annuities, brokerage accounts, or even their life insurance. This is the number one estate

planning mistake I see with our senior clients. So, what do I mean by “valid beneficiary”? Well,

that depends on you! Sometimes a beneficiary could be a previous spouse or a person that

recently passed away. In these cases, the beneficiaries are not organized properly or the

beneficiary percentages may be outdated.

Take the case of the late actor Philip Seymour Hoffman. When he created his will in

2004, his only child was his first-born named Cooper. By the time he suddenly passed away in

2014, he and his longtime companion, Marianne O’Donnell, gave birth to two additional

children. In the ten years that passed since he created his will, Mr. Hofman never updated his

beneficiaries. Thankfully, Ms. O’Donnell was the sole primary beneficiary with Cooper as the

secondary beneficiary. If Ms. O’Donnell passed before Mr. Hoffman, then there would be a long

and tedious probate process to reallocate his assets between all three of his children. It is

always paramount to carefully consider who you would like to be your beneficiaries and review

them whenever an important event occurs.

Because of the cost and time of probate, many seniors will try to avoid this tedious

process as much as possible. Thankfully there are three main alternatives to probate. First, you

can list a beneficiary on an account like IRAs, bank accounts, and life insurance. With a valid

death certificate, these accounts will promptly transfer the ownership to the named beneficiary.

Additionally, titling options can provide survivorship features. For example, a married couple

can own their house as “Tenants by Entirety”, and when one spouse passes away, the sole

ownership of the house can swiftly shift to the surviving spouse A third strategy for avoiding

probate is the creation of a trust. A trust can promote anonymity and quickly shift assets to

your heirs. With a trust, you can designate primary and contingent beneficiaries for most of the

assets you own. Creating a trust is often a fantastic way to organize your estate.

Most seniors procrastinate their estate planning, but it is vital to have a comprehensive

plan of asset distribution. As a Certified Financial Planner™ (CFP®), I specialize in tailoring

financial plans to specific estate planning needs. If you seek guidance in determining the steps

needed in your family’s estate planning, feel free to call at (321) 956-7072 for a no-obligation,

private appointment.

Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory services

offered through J.W. Cole Advisors, Inc. (JWCA). ValaVanis Financial and JWC/JWCA are

unaffiliated entities.