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Houston Estate Planning and Probate Blog

Monday, May 1, 2017

Top 5 Overlooked Issues in Estate Planning

Top 5 Overlooked Issues in Estate Planning

In planning your estate, you most likely have concerned yourself with “big picture” issues such as who inherits what and should I have a living trust or a Will based plan? There are some details that are often overlooked, and may change the distribution of your estate away from your intended beneficiaries. Listed below are some of the common overlooked estate planning issues.

Liquid Cash: Is there enough available cash to cover the estate’s operating expenses until it is settled? The estate may have to pay attorneys’ fees, court costs, probate expenses, debts of the decedent, or living expenses for a surviving spouse or other dependents. Your estate plan should estimate the cash needs and ensure there are adequate cash resources to cover these expenses.

Tax Planning: Even if your estate is exempt from federal estate tax, there are other possible taxes that should be anticipated by your estate plan. The estate may have to pay income taxes on investment income earned before the estate is settled. Income taxes can be paid out of the liquid assets held in the estate. Other taxes may be paid by the estate from the amount inherited by each beneficiary. 

Executor’s Access to Documents: The Executor, estate Administrator, or Trustee needs to be able to access the decedent’s important papers in order to locate assets and handle the decedent’s affairs. Also, creditors need to be identified and paid before an estate can be settled. It is helpful to leave a notebook or other instructions listing significant assets, where they are located, identifying information such as serial numbers, account numbers or passwords. If the Executor is not left with this information, it may require unnecessary expenditures of time and money to locate all of the assets. This notebook should also include a comprehensive list of creditors, to help the Executor verify or refute any creditor claims.

Beneficiary Designations: Many assets can be transferred outside of a Will or trust, by simply designating a beneficiary to receive the asset upon your death. Life insurance policies, annuities, and retirement accounts are some of the assets that can be transferred directly to a beneficiary. To make these arrangements, submit a beneficiary designation form to the financial institution, or retirement plan. Be sure to keep the beneficiary designations current, and provide instructions to the Executor listing which assets are to be transferred in this manner.

Fund the Living Trust: Unfortunately, many people establish living trusts, but fail to fully fund them, thereby reducing or eliminating the trust’s potential benefits. To be subject to the trust, as opposed to the probate court, an asset’s ownership must be legally transferred into the trust. If legal title to homes or some financial accounts are not titled into the name of the trust, the Trustee has no legal authorization regarding the assets and transfer of title of the assets may require probating a Will.


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