Estate planning was never just about taxes

One outcome of the 2013 tax code changes is U.S. citizens can leave up to $5.25 million free of estate taxes if they pass away in 2013. This $5.25 million exemption amount is automatically adjusted for inflation each year. Married couples can leave up to $10.5 million free of estate tax to the next generation. As a result, for most people, estate tax issues are no longer a concern. This reduction in potential taxes does not reduce the need for estate planning. Estate planning was never just about taxes.

One goal of estate planning is to make sure assets are available for the desired parties at the desired times. Accomplishing this goal is driven by factors unrelated to whether a potential estate tax applies or not. The flow of assets in one’s estate is dictated by three things: designations, ownership, and provisions.

…for most people, estate tax issues are no longer a concern. This reduction in potential taxes does not reduce the need for estate planning.”


Many types of accounts allow the account owner to name beneficiaries. Making beneficiary designations is a routine part of setting up IRA, 401(k), 403(b) and other retirement accounts. They are also a standard part of life insurance and annuity contracts. What many do not realize is that the named beneficiary of such accounts receives those funds outside of the probate process, regardless of what the owner’s will or trust may designate. For this reason, it is essential to keep your beneficiary designations up-to-date and aligned with your wishes. For example, if your will designates you leaving everything to your daughter, but your son is named as primary beneficiary, he will be entitled to those funds.


How an asset is titled controls how it is treated. Similar to how beneficiary designations dictate who inherits assets, those owned “joint with rights of survivorship” become the surviving owner’s assets by operation of law upon a death, regardless of what one’s will or trust may dictate. It can seem like a simple way to avoid probate, but putting one’s child on as a joint owner can disinherit all other children of the owner and expose the parent’s money to the claims of the children’s creditors.

Accounts owned individually without a beneficiary designation go through probate. These accounts then are subject to the terms of the deceased’s will and become public record.  They are also exposed to the costs and delays that give probate an unflattering reputation. Many people take the time to create trusts to control the disbursement of their assets, avoid probate, and make management of their affairs easier should they become incapacitated. However, the only assets subject to such treatment are those actually titled in the name of the trust.


Even when assets are titled correctly, it is important to revisit the provisions in one’s will, trusts, powers of attorney, living will, and health care surrogate. Sometimes, the people named in these documents to receive funds or make decisions fall ill, die, marry, divorce, get into financial or legal trouble, become more mature, or have children and grandchildren. As life situations change, the particular provisions of one’s estate planning documents may no longer fit the situation making an update important.

Are you confident your documents reflect your wishes? We would be happy to review your plans with you.

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Moisand Fitzgerald Tamayo, LLC is an Orlando, Tampa and Melbourne, Florida based fee-only financial planner serving central Florida and clients across the country. Moisand Fitzgerald Tamayo, LLC specializes in providing objective financial planning, retirement planning, and investment management to help clients build, manage, grow, and protect their assets through all phases of one’s life and the many transitions in between. If you have any questions or would like to discuss anything further, please give us a call or send us a note. If you are not a client and wish to receive emails notifying you of new posts – no more than once per month – fill out the subscription information in the sidebar to the right. For more frequent updates, follow us on FacebookLinkedIn, or Twitter.  

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About Dan Moisand

Dan Moisand is a fee-only financial advisor with Moisand Fitzgerald Tamayo, LLC. He is a regular contributor for multiple outlets, including Florida Today, MarketWatch, and The Wall Street Journal. His writing and financial advice have also been featured in Financial Planning, Investment Advisor, Wealth Manager/Advising Boomers, Forbes, Smart Money, and The New York Times, among other publications. He is the only two-time winner of the Journal of Financial Planning’s “Call for Papers” competition and has been named a top financial planner and advisor by multiple publications. Investment News named Dan one of the “twenty most influential men and women” in the history of financial planning. He currently serves on the Board of Directors for the CFP (Certified Financial Planner) Board.


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