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Mistakes to Avoid- Financially Irresponsible Needs Beneficiary

Beneficiary designations, account titling (ownership arrangements), and traditional estate planning tools (trusts and last wills) work together to create a fully functioning estate plan. Another common mistake made with beneficiary designations and ownership arrangements includes naming a financially irresponsible beneficiary.

Some family members and loved ones will never be financially responsible. Naming this type of individual as a direct beneficiary serves only to contribute to gambling or drug addiction, or result in assets being claimed by creditors or by ex-spouses after a divorce.

A better way to plan includes creating a lifetime “spendthrift trust” to hold the inheritance for the benefit of that individual during his or her lifetime to protect the assets from creditors, spouses, and from their addictions.

Over the next several posts we will explore these common mistakes in more detail.

To be continued….
Aaron E. Futterman, CPA, Esq. is a partner in the law firm of Futterman & Lanza, LLP with offices in Smithtown, NY and clients throughout Suffolk, Nassau, Queens, Brooklyn, Bronx, Richmond, New York, Westchester and Rockland Counties. He concentrates his practice to Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Probate, Estate Taxes, and Estate Administration.

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