Many Massachusetts residents engage in estate planning to ensure that their family will receive their assets after death. However, if they are not careful, they could end up sabotaging their efforts. Understanding potential estate planning barriers to achieving asset protection might remove this risk.
One deceptive method of avoiding probate is to title assets jointly with a child or other family member. This may transfer an asset directly to the other party upon death, but it also gives that person legal rights to it as well. This means that if the original owner decided to sell the property, the sale could not go through without the approval of the joint owner. In addition, the property could be used to satisfy an obligation of the other party owed to creditors, ex-spouses or others.
Another potential pitfall of estate planning is failing to keep beneficiary designations current. When a major life event occurs, many Massachusetts residents will make the appropriate changes to their wills and trusts. Unfortunately, some people forget to do the same to accounts that automatically pass to a designated beneficiary on death, such as retirement accounts and insurance policies. A beneficiary designation supersedes the provisions of a will.
These are just two of the ways that people inadvertently put their estates at risk. Fortunately, estate planning can correct these asset protection pitfalls. Before making any decisions as to how to protect the assets of an estate, it may be beneficial to discuss an individual’s goals and desires with someone familiar with estate planning. Other methods exist to protect the property of an estate that do not also increase its exposure to taxes, creditors and others. In addition, once these plans are in place, it is necessary to periodically review the documents to be sure that they still accomplish a person’s desires.
Source: consumerreports.org, “6 costly estate-planning minefields, and how to avoid them“, April 14, 2015