A mistake during the estate planning process can negatively impact the economic future of family members and other loved ones in unforeseen ways. One of the most common mistakes is to list charities as part of trusts or wills. This is a mistake for many families in Florida because there are more tax-efficient ways to pass on money to charity and other recipients. Since charities don’t pay most taxes, it’s not necessary to use a will or trust as an instrument for giving.
Most families have a variety of savings tools they use to pass on money, including IRAs, 401(k)s, savings accounts, pensions, and real estate. When these assets are passed on to certain recipients, certain tax rules are put into effect. Assets invested in an IRA, for example, are taxed when they are passed on to children, but they aren’t when given to charity.
When going through the estate planning process, ensuring that money flows to its intended recipients should always be a top priority. This goal can often be reached by deciding not who gets what but who gets which. Coordination between estate planners and financial brokers may be required to reach certain objectives across a breadth of assets. This is an effective way to avoid estate planning mistakes.
Families may benefit from the support and guidance of an estate planning attorney when deciding how to distribute their assets. How and when certain financial instruments are taxed can be very complicated, so it’s the responsibility of a lawyer to keep up with all laws that affect their client’s objectives. A lawyer may help draft and execute any documents required to fulfill the goals of their clients.