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The Ten Most Common and Most Costly Financial Mistakes in Dealing with the Death of a Spouse, Life Partner, or Any Other Close Relation

(Part 1)

Let’s face it, many of us do not even like thinking about this subject. Because of this, many of us may not plan well enough for such a sad occasion in our loved ones lives. For whatever reasons you may be reading this debt free article on this debt free site, you must understand that proper estate and after death planning is vital to the well being of your loved ones after your death. You may be reading this article only because the title intrigues you, you could be reading it because you have just emerged from old debt issues and you are starting to get better at planning your family’s future should you pass away. Again, whatever the case proper planning is a must in this matter.

Some of you may be reading this article because you have just lost your spouse, life partner or other loved one. If so, this is an incredibly hard time for you and those close to you. Be sure to read the ten mistakes below and learn how to navigate yourself through this rough time properly.

Here are the ten most commonly made mistakes your family could make regarding your death benefits and your estate after you die. This is why it is vital that you set forth proper wishes. If you do not plan well enough these following mistakes can easily be made after you die:

1. Selling of assets too quickly. Thought should go into the timing of the sale of securities and or properly, taking into account both market conditions and tax implications.
2. Not filing, or not filing in a timely manner, appropriate federal and state estate tax forms. Problems can crop up years later when assets are sold (especially real estate) and proof of estate tax payments is required for title transfer. Many people do not know that state tax filings are required even when no tax is due. They also help to substantiate cost basis (fair market value at the time of death) if assets are later sold.
3. Failure to change beneficiary designation on retirement plans and insurance policies. Assets in your qualified plans and your insurance policies will be subject to probate fees if you do not have a living beneficiary named on such plans. Your estate, as the beneficiary of your retirement plans, will be increased (as will your taxes).
4. Failure to segregate estate assets, liabilities, income, and expenses. A new tax entity, meaning the estate, is created at the date of death. This translates into tax savings or at the very least a delay in the timing of required tax payments.

We continue this article regarding proper estate planning on the next page. There you will find numbers 5-10.

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