• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Sexton, Bailey Attorneys, PA

SEXTON BAILEY ATTORNEYS, PA an Arkansas Estate Planning & Trust Information Center

Sexton, Bailey Attorneys, PANorthwest Arkansas Estate Planning Attorneys(479) 443-0062

Client Vault
  • Home
  • Our Firm
    • Our Firm
    • About the American Academy
    • Advantages of Working With Our Firm
    • Attorney and Staff Profiles
    • News & Events
    • Our Reviews
    • Speaker Connection
  • Estate Planning
    • Asset Protection & Business Planning
    • Elder Law & Medicaid Services
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses & Farms
    • Incapacity Planning
    • Legacy Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
  • Webinars
  • Practice Areas
  • Resources
    • DocuBank
    • Elder Law Reports
    • Estate Planning Resources
      • Estate Planning Articles
      • Estate Planning Checkup
      • Estate Planning Definitions
      • Estate Planning Reports
      • Incapacity Planning Definitions
      • Is Your Estate Plan Outdated?
      • Top 10 Estate and Legacy Planning Techniques
    • FREQUENTLY ASKED QUESTIONS
      • Estate Planning
      • Frequently Asked Questions for Families Without an Estate Plan
      • Legacy Wealth Planning
      • Medicaid Planning
      • Pet Planning
      • Trust Administration & Probate
    • Newsletters
    • Trust Administration & Probate Resources
      • Bereavement Resources
      • How to Know if You Need Extra Help With Your Grieving
      • Loss of a Loved One
      • The Mourner’s Bill of Rights
      • Things You Need To Do When a Loved One Passes Away With a Trust
      • Things You Need To Do When a Loved One Passes Away With a Will
      • Trust Administration & Probate Definitions
  • Reviews
    • Our Reviews
    • Review Us
  • Contact Us
  • Blog
Home / Estate Planning / Basics of Estate Planning: Lack of Coordination

Basics of Estate Planning: Lack of Coordination

October 23, 2017 by Audra Bailey Wilcox Leave a Comment

Blog Author: Stephen C. Hartnett, J.D., LL.M. (Tax), Director of Education,
American Academy of Estate Planning Attorneys, Inc.

This is another in a series of blogs on the basics of estate planning.

Perhaps the most common mistake in estate planning is a lack of coordination. This is not where the client, attorney, or advisor cannot walk and chew gum at the same time. This is a failure to consider all the different aspects of a plan and how they may (or may not) work together.

An ever-increasing share of an individual’s wealth is controlled by beneficiary designation.

These may take the form of:

  • Real estate controlled by a beneficiary deed
  • IRAs
  • 401ks
  • Life insurance
  • 529 plan
  • Brokerage account with beneficiary designation
  • Bank account with beneficiary designation

The client may have thought they were being proactive by putting beneficiary designations on many of their assets. Let’s say they’ve executed a beneficiary deed on their house with their daughter, Susan, as the beneficiary. Let’s say their brokerage account designates their son, George. The IRA names their son, Bobby, directly.

Years later, the client decides to get a will and seeks the help of an attorney. The client tells the attorney they want a simple will leaving everything to their son, Bobby, because he’s been caring for them for years now. The attorney could draft a will-based plan leaving all the client’s assets to the son. It may be a well-crafted plan and keep the assets in a testamentary trust for the son, maybe providing divorce or creditor protection, if appropriate.
However, the only thing Bobby would get would be the IRA. Further, the IRA going to Bobby would not have creditor protection under federal law (though in places it might have protection at the state level).

This underscores the importance of clients telling their attorneys what they’ve done in the past and consulting with their attorney before moving assets in the future. If the attorney had drafted and funded the assets into a trust, this would have avoided the problem. Of course, the problem could still exist regarding assets not funded into the trust or later acquired in the client’s name individually. However, if a will were used as the primary planning vehicle, the attorney may not have known of the beneficiary designations. The will only controls the items which are in the client’s name upon death. Items with a beneficiary designation transfer to the beneficiary upon death and are not part of the probate estate and not controlled by the will. Similarly, items in joint tenancy pass to the surviving joint tenant by operation of law and are not controlled by the will.

A well-drafted will or trust is only one aspect of a good estate plan. There’s nothing wrong with using beneficiary designations where appropriate. But, the designations must be coordinated with the rest of the plan.

An upcoming blog will look at another common mistake in the planning process.

  • Author
  • Recent Posts
Audra Bailey Wilcox
Audra Bailey Wilcox
Attorney at Sexton, Bailey Attorneys, PA
Audra Bailey Wilcox
Latest posts by Audra Bailey Wilcox (see all)
  • Bill Nye the Science Guy on Wearing Masks in Public - July 11, 2020
  • Low-Interest Loans: An Estate Planning Technique - June 23, 2020
  • Irrevocable Medicaid Trusts - June 16, 2020

Leave a Reply Cancel reply

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

Sexton, Bailey Attorneys, PA

Is Your Plan Outdated?

Subscribe to Our Blog

Office Address

Fayetteville
2766 Millenium Drive
Fayetteville, AR 72703
Phone: (479) 443-0062

Office Address

Prairie Grove
1100 Division Street, Suite 4
Prairie Grove, AR 72753
Phone: (479) 846-6026

Office Address

Farmington
6 West Main
Farmington, AR 72730
Phone: (479) 267-4441

Office Hours

Monday9:00 AM - 5:00 PM
Tuesday9:00 AM - 5:00 PM
Wednesday9:00 AM - 5:00 PM
Thursday9:00 AM - 5:00 PM
Friday9:00 AM - 12:00 PM

Map

map for office
  • Facebook
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

footer-logo

© 2021 American Academy of Estate Planning Attorneys, Inc.