2025 ESTATE PLANNING PITFALLS: WHAT WE CATCH BEFORE IT’S TOO LATE
beneficiaries must withdraw the entire inherited IRA within ten years. This can result in significant tax consequences. In higher-net-worth planning, we often incorporate trusts with specific provisions for IRAs
Have your beneficiary designations kept pace with your current wishes? Is your homestead properly protected under Florida law? Have you reviewed your documents since your last major life event? We help clients work through these kinds of questions every day. Addressing them can save your family stress at the worst possible time. This article will discuss some of the most common planning pitfalls we have seen frequently through the first 3 months of 2025. These subtle oversights may not seem urgent at first but can lead to costly, time-consuming complications when a health crisis or death occurs. Fortunately, if caught in time, most of these “pitfalls” can be easily resolved. 1. Outdated or Misaligned IRA Beneficiaries One of the most frequent and impactful mistakes we see involves Individual Retirement Accounts (IRAs). Many clients assume their will or trust governs who receives these assets, but IRAs pass strictly by beneficiary designation, regardless of what is in your estate planning documents. Not long ago, we met with a widow whose husband had passed away unexpectedly. Although they had updated their wills after a second marriage, the beneficiary designation on his IRA, worth over $1.2 million, still named his first wife. Florida law offered no remedy. As a result, his current spouse received nothing from that asset. IRA custodians will follow the beneficiary designation on file, regardless of what your will says. That’s why we encourage clients to review these designations regularly, especially after life changes like marriage, divorce, birth, or death. Additionally, beneficiary decisions should be made with tax implications in mind. Under the SECURE Act, most non-spouse
to create both flexibility and tax efficiency. 2. Joint Accounts Aren’t Always Equal
Florida offers married couples a special form of joint ownership called tenancy by the entireties (TBE), which provides strong protection from creditors. Unfortunately, many financial institutions default to joint tenants with right of survivorship (JTROS), which lacks those same safeguards. Many clients unknowingly hold significant joint accounts in JTROS. In those cases, personal liability exposure extends to accounts held by a spouse. This can be avoided with TBE ownership. TBE in Florida provides: - Protection from creditors of only one spouse - Automatic right of survivorship - A requirement that both spouses consent before severing the ownership When opening or reviewing accounts with your spouse, it is important to clearly request TBE ownership and confirm the title designation with your financial institution. We often work alongside financial advisors to ensure titling aligns with asset protection goals. 3. Transfer on Death Designations Can Undermine Your Trust Transfer on Death (TOD) designations are commonly used to avoid probate, but they can directly conflict with your estate plan’s intent, especially in families with trusts or special considerations. Directing assets by TOD instead of through a properly structured trust can undermine special needs planning. If a beneficiary with disabilities receives an inheritance outright—rather than through a trust designed to preserve government benefit eligibility—it can
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