Most of us don’t plan to fail, we fail to plan.

Dwight Eisenhower said, “when preparing for battle, I always found plans useless, but planning indispensable.”

If you can envision it, we can make it happen efficiently with a minimum of delay, tax, and cost. Our goal is for you to control your property while you are alive and well and to transfer what you want, to whom you want, when you want, the way you want, all at the lowest overall cost.

  1. Not understanding how your assets will pass at your death.
    1. Contractual (beneficiary designations)
      1. life insurance
      2. annuities
      3. retirement accounts
      4. POD/TOD
    2. Right of survivorship
      1. joint tenancy
      2. community property
    3. beneficiary deeds
    4. remainder interests
    5. small estate probate
  2. Planning around specific assets
    1. Accounts
    2. Property
    3. business
  3. Not minimizing estate taxes
    1. A/B trust planning
    2. Marital deduction
    3. FLPs and other allowed valuation discount techniques
    4. Advanced techniques to separate the right to income from ownership of the asset
    5. Life Insurance mistakes (failure to use ILIT)
  4. Woes of Joint Tenancy
    1. Avoids only one (1) probate
    2. Lost control over the asset (survivor may not distribute the property in accordance with your intentions)
    3. Incurs an immediate gift tax liability
    4. May lose step-up in basis
    5. May need to litigate against creditor of joint tenant to establish and retain title to your own property
    6. “Botched” attempts could have unintended consequences (importance of “right of survivorship” language)
    7. Creates unintended heirs
  5. Sloppy drafting that looks good but fails to accomplish your intentions
    1. Common with trusts purchased from non-lawyers. May look very professional or even been drafted by an attorney, but unless the attorney discussed your intentions in sufficient details, the plan probably relies on “boilerplate” in an inappropriate manner that may be disastrous.
    2. The documents should be nearly free, it is the counseling that is valuable – i.e., the difference between cheap versus inexpensive.
  6. Assuming your trust plan works
    1. See above
    2. Do you know what your plan actually says
    3. Not realizing that with or without a Will and with or without a trust, you will need professional guidance and incur most of the same expenses. With a trust, you may avoid a probate, but you will still have all the other expenses associated with transferring titles and seeking professional help, legal advice, tax returns – final return for decedent, income tax return for the estate for each year that it remains open, estate tax return if necessary.
  7. That disinherited child
    1. Does your plan provide for after born child or other descendants
    2. Are your beneficiary designations up to date and are the contingent beneficiaries correctly described.
  8. Relying on beneficiary designations
    1. Unless current, the default provision may not be your personal choice.
  9. Trying to do it yourself
    1. You can fill out the forms, but can you fill out the form correctly, and how do you know the difference?
  10. Not considering who pays the estate tax
    1. The incidence of taxation may not fall evenly on all assets and may have disastrous consequences if not properly described.
  11. Not understanding income tax consequences
    1. IRA assets will be taxed as distributed
  12. Gifting appreciated assets
    1. Donee loses opportunity for step up in basis
  13. Giving the wrong gift to charity
    1. Better to donate appreciated property at FMV without paying capital gains (rather than sell property and then contribute cash, or merely contributing cash)
  14. Missing disclaimer deadlines or failing to meet all requirements
    1. Must be done within 9 months after date of death
    2. Disclaimant must not exercise control or accept a benefit
    3. Must give proper notice
  15. Using Uniform Gift to Minor Accounts
    1. Minors will take entire account with no accountability at age 18 or 21 depending on the nature of the gift
  16. Property left to minors
    1. Property must be held in trust without specific guidelines
    2. Minors will take property outright at age 18
  17. Not using Special Needs Trust
    1. May disqualify special needs person from government benefit; or
    2. Unnecessarily deprive special need sperson from using allowable private help
  18. Not protecting loved ones from themselves, creditors, and predators
    1. In many cases trust provisions and corporate trusts can provide continuing control and supervision over assets
    2. Urban legend that all outright inheritances are spent or lost within 18 months.
  19. Wills can always be changed
    1. Can’t rely on heir living up to his or her part of the bargain except with appropriate trust with appropriate characteristics.
  20. Not avoiding probate
    1. Not a biggie in AZ, but many folks with non-taxable estates fall prey to “trust mills” based on selling the fear of probate, and then fail to avoid probate because of lack of proper supervision.
  21. Trusts not fully funded
    1. Same as above, if you have a trust and fail to retitle all proper assets, you will have accomplished little or nothing.
  22. Relying on Wills for tax planning when it is impossible for the plan to be effective beyond the first death
  23. Not contemplating changes during a divorce
  24. Power of Attorney not containing a gifting power or containing an inadequate gifting power
    1. Particularly important for ALTCS planning, but also
    2. Estate tax planning
  25. Inadequate powers of attorney
    1. Must comply with AZ law concerning exploitation of vulnerable adults or may be useless.