Trish Stark, senior vice president and director of client relations at First Western Trust in Scottsdale, notes that with the complicated nature of wealth planning, certain factors often get overlooked. She shares ten tips to help individuals avoid making common mistakes.
1. Not understanding the rules
To avoid accidentally adding the wrong assets to a trust and inadvertently undermining one’s wealth plan, one should engage an advisor who knows the ins and outs of estate and wealth planning.
2. Paying unnecessary taxes
Making a significant charitable contribution in the form of cash is an inefficient distribution method. Instead, one should choose a highly appreciated asset.
3. Overlooking the details
One may have hired and paid an estate planning attorney to create an estate plan, but the best-laid plans can unravel by not titling one’s assets consistently with one’s estate plan.
4. Assuming one’s loved ones know what one wants
One should make sure to have a living will and power of attorney documents in place against the possibility that one becomes incapacitated or passes away unexpectedly.
5. Thinking one will die early
It’s a mistake to wait until one is in one’s 90s to recognize the full impact a long life has on one’s financial resources.
6. Thinking one will live forever
Not creating and implementing a financial plan due to thinking one has more time may create financial challenges for loved ones.
7. Letting one’s lifestyle dictate one’s portfolio structure
One should determine one’s risk tolerance (the amount of market volatility that’s acceptable) and let that guide one’s investment and spending plan.
8. Being narrow-minded
Understand that security pertains to more than just financial capital. Life-changing events — including family issues, loss of job, health care, death and disability — may impact one’s overall wealth plan.
9. Assuming one doesn’t need a trust
A trust can protect oneself and loved ones from creditors and predators.
10. Assuming identity theft happens to someone else
One should take care when providing personal details and check one’s accounts often to ensure that no suspicious activity has occurred.
This article ran as a sidebar to “Wealth Management: How to Prosper in a New Economy“