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Are You Making These Catastrophic Financial Blunders? Thumbnail

Are You Making These Catastrophic Financial Blunders?

Death is an unfortunate reality of life and can happen at any age.

I’m sure you want to be fully prepared when the inevitable day comes.

You don’t want your friends and family picking up pieces of your life while they grieve.

If you don’t want to leave your family a mess to clean up… then a proper estate plan is essential at any stage in your life.

The unfortunate truth is that most people haphazardly plan for the finish line.

I often see people make mistakes that cause pain and frustration for their loved ones.  Because they don’t know the rules or consult an expert… they subject their loved ones to YEARS of probate court, time, and expenses.

Don’t make simple mistakes with your estate.

Here’s a list for you of common mistakes I see with estate planning. Make sure you’re not making these mistakes in your own life!

1. Assume that your will is going to take care of all the details

Beneficiary designations (on IRA, 401K, brokerage..etc.) trump what’s in your will.

2. Give your heirs an avoidable tax bill

If you don’t designate beneficiaries on your IRA... your heirs won’t maintain tax-advantaged growth over their lifetimes (via a stretch IRA). Without a beneficiary, your IRA money will go through probate. And your family (excluding spouses) will be required to withdraw the money within five years. This incurs an immediate tax bill.  And it makes all subsequent earnings and capital gains subject to income taxes.

3. Trigger probate on life insurance proceeds

If you name your estate as the beneficiary of your life insurance, it becomes subject to probate. Instead, name an individual or a trust as beneficiary for life insurance.

4. Forget to update forms when life happens

Just as bad as failing to name a beneficiary... is having the wrong beneficiary. Beneficiaries can marry, divorce, come of age, or tick you off. That’s how exes and bitter sisters-in-law get rich.

5. Not having a Plan B

If your primary beneficiary isn’t around to collect, and no secondary beneficiary is named... the court decides who gets your money.

Be exact. You can name multiple primary and secondary beneficiaries.

Don’t be afraid to spell out how you want your assets divided.

6. Name minor children as beneficiaries

Until age 18 or 21 (depending on state laws), minors can inherit only limited amounts. Designate a financial guardian or set up a trust for a minor. Either of these need detailed directions on how to manage the windfall until the children are of age.

7. Disinherit kids from a first marriage

Houses, bank accounts, and other assets held jointly go right to the co-owner.  No matter what your will states.  This can leave children from a previous marriage no rights to contest.

You can prevent this.  Use beneficiary designations on assets that carry no spousal or joint ownership constraints.

8. Overlook others you want to take care of

Estate laws favor spouses. Payable- or transferable-on-death accounts automatically go to the closest living relative. It will not go to a charity or life partner unless designated otherwise.

9. Fail to get permission to bequeath your qualified retirement plans

By law, spouses are first in line to inherit retirement funds and assets. (subject to right-of-survivorship laws) If you wish to leave the money to someone else, your betrothed must sign a written waiver... or the deal is off.

10. Assume your wishes are on file

Don’t take it on faith that a beneficiary form you filed 30 years ago is still there.  Or that when you switch plans, your beneficiary form automatically transfers. Get copies from every bank, fund, and insurance company. Regularly.

11. Update forms incorrectly

Marking up beneficiary forms and initialing your changes won’t hold up in court. To override your old requests, make changes in writing.  And give a copy to the institution where the original is (hopefully) on file. Then get copies - regularly.

12. Keep your plans a secret

Have a record of all your assets, wishes, and plans. Let your loved ones know where to find those records. You don’t want your loved ones scrambling to figure things out while they’re grieving.

13. Misspell names

You must correctly spell the full legal names of all your heirs. You must also provide the correct Social Security numbers, if requested. You don’t want to cause your loved ones pain because of a typo.

At Green Mountain Planning,  we help our clients stay on top of their estate plans.  We leave nothing to chance.  

We know the estate planning process… so we ensure that our clients have a rock-solid plan in place.  And we keep everything up-to-date so there are no surprises for your heirs.

Please feel free to forward this email to someone you care about and who can benefit from this information.

Don’t leave your estate plans to be decided by a court.

If you have any questions or thoughts feel free to reach out at any time.


All of our engagements begin with a free no obligation introduction or second opinion review.

P: 970-620-8688

E: nestor@greenmountainplanning.com


About Nestor Vargas:
https://lh5.googleusercontent.com/U-t-W2KV50LkmC2McPI5UtfPoHw4zJZ2RD4Cf692DnCyLWkSe2hxSRNeNoTstO2tmZfzeN0qJfCLlLI3a5jYh82WupSk4ivpa892G9r5hRXFJXw7NCmOAU1McROINTCYdPkC1lqt3s8dsiA2tgFor more than a decade, Nestor has helped his oil and gas professionals define their personal financial values to help build a plan that centers on rewarding outcomes. The journey, he believes, is every bit as important as the destination. He established Green Mountain Planning as a fee-only financial firm to avoid the pitfalls and conflicts of interest found in other agency settings. “I work for you, not any company or product.”