Local news for Vero Beach published an article regarding how baby boomers and other retirees should review their beneficiary designations to avoid relatives arguing over inheritance and tax burdens. 

Many people who are retired have already been saving for decades and some have already created wills, trusts, or various other estate planning documents. While these are sufficient in most cases for giving this wealth to the next generation and charitable causes, certain items such as IRAs cannot be distributed through a probate court or the terms of a will. It is important to review any estate plan for common mistakes

Tips to avoid additional costs when assigning a beneficiary

Because of these potential pitfalls, there are a few areas that should be reviewed along with a legal professional who deals with property law.

The first is to check whether it is appropriate to make the estate the beneficiary. When a person dies and they direct the probate court to distribute retirement accounts according to the terms of a will or simply add it to the estate, but this often causes problems. The probate process is a court proceeding that can take lots of time and cost large amounts of money. The funds will be tied up and additional tax burdens can emerge. The assets distributed through the estate will also be taxed at a much higher rate if they pass through probate courts. Retirement accounts can simply name beneficiaries to avoid this process and not waste money by sending it to probate for additional taxes.

Also, many individuals mistakenly think passing these same assets into a trust is an efficient way to distribute them, but this also causes problems. The IRS will require that all of these assets be paid out within five years or less after the client’s death, which can prevent investments from maturing. Trying to maintain these assets within a trust is also very expensive, which can significantly reduce the amount that is paid out to the beneficiaries when it is time for them to collect. Tax rates for trusts are set at almost 40%, which can further deplete the funds.

Another common mistake is to forget about a former spouse that was designated as a beneficiary. A divorce will not automatically change these designations, and almost no one actually intends to give their estate to a former spouse, which means that this can cause severe problems if left unnoticed. 

Estate planning issues and costs

As these tips show, estate planning can quickly become a complex endeavor, and families who are not careful may end up losing much of their inheritance to taxes and fees. 

Speak with an attorney in your city about inheritance and estate planning issues

There are lawyers in Vero Beach, Florida who serve local clients with probate and inheritance guidance. For immediate help, contact:

The Estate, Trust, and Elder Law Firm

850 NW Federal Highway, #1004, Stuart, FL 34994



0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *