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Estate planning for transferring wealth

| Nov 13, 2020 | Firm News

Transferring wealth is an important function of an estate plan. Doing so effectively can be difficult though, especially when there are a number of factors to consider. This is why estate planning often requires careful attention to specific details, including some of the following.

It is important to properly designate the correct beneficiaries. This might seem straightforward, but a single mistake can amount to thousands of dollars in taxes and Texas court fees just to sort the problem out. Problems arise when someone designates someone as a beneficiary for a retirement or investment account, but then names a different beneficiary in his or her will. Correctly designating the correct beneficiary with a transfer-on-death designation can avoid unnecessary headaches.

It is also unwise to name a minor as a beneficiary. Depending on the type of account in question, a minor might not have any legal authority over the investment or inheritance until he or she is an adult. Instead of the money going directly to the heir, a court appointed guardianship would manage it on his or her behalf. Creating a trust is an effective alternative to simply leaving an inheritance to a minor. One can name a preferred trusted individual to manage the trust and its assets on behalf of the heir.

People in Texas work hard for what they have, and no one wants to see taxes and court fees eat into that. Giving careful thought and attention to estate planning is usually an effective way to avoid such outcomes. However, it may be advantageous to learn more about effectively transferring wealth before committing to any major decisions.

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