5 Avoidable Mistakes in the Will You Write

We have seen our share of client-drafted wills. While most people opt to have a lawyer draft their last will and testament, there is no requirement that an attorney do so. If you do opt to draft your own will, make sure to avoid the following five mistakes that we repeatedly see in layman-drafted documents.

1. No Inclusion of Your Family Tree

The core idea of a will is that you can leave your money to whomever you choose. However, most people don’t understand that your nearest family members are allowed to contest your will in court. Yes, they will most likely lose that contest, but your next of kin do have the right to know that you are disinheriting them, so they must be placed on notice when you dies, and your will is submitted to the court for probate. The court will want to know your nearest heirs, particularly if you are estranged from them, since the court assumes, they are the most likely parties to contest your will. Include the members of your family tree (spouse, children, parents, siblings) who are alive and deceased (so that the court knows that these people do not need to be put on notice) and addresses of where your next of kin reside. If a close family member is being disinherited, make sure to state that in the will. Excluding your next of kin or ignoring their existence does nothing to bolster the validity of your will.

2. Leaving Funds to Beneficiaries Who are Minors

Remember being 13 and receiving $100? It seemed like all the money in the world … until it was spent within one week. Remember: Minors cannot own substantial funds in their own name, clearly with good reason. In the case of any minor beneficiary receiving significant amounts of money outright, a court would be required to hold a guardianship or conservatorship proceeding. A judge would appoint someone to oversee the funds (at your estate’s expense) to safeguard them until the child reaches 18 (at which point the child “buys the fraternity”). This guardian appointment is something you would have no control over, so, while it would be unusual, it could even be the judge’s campaign contributor or golf buddy attorney. Your will can avoid this by not transferring your money directly to a minor. Allow your executor to leave bequests made to minors to a Uniform Transfers to Minors Act (UTMA) account. This allows the funds to be administered by your choice of custodian until the minor reaches 21. Yes, 21 is still a young age to leave significant funds to a child, but UTMAs do avoid court oversight, because the account is not being given directly to a minor. For larger sums, you should create testamentary trusts in your last will and testament (testamentary get it?). These trusts can be as expansive or limited as you want. You can say “funds shall be used for the beneficiary’s health and education until she reaches 30, at which point all remaining trust funds are to be distributed,” or “the Trustee shall have full discretion how funds are used.” Name a suitable trustee (much like you do with an executor, see below), and state who receives the funds if something happens to the beneficiary.

3. Selecting Executors Without Flexibility

Naming an appropriate executor is critical, because this person will be in charge of your estate’s affairs. Your executor “steps into your shoes,” meaning he can enter into contracts, collect your property, pay taxes and creditors, distribute your estate, order financial and medical records … basically everything you can do. You should attempt to name the most trustworthy and capable person you can think of to serve as executor. One mistake people make is naming either too few or too many executors. If you name only one executor and she cannot serve (due to inability, disinterest or her own death) your beneficiaries may wait a very long time for the court to appoint another executor. If you name too many people to serve at one time you risk them disagreeing with one another or not coordinating effectively. Name responsible, reliable individuals as executors; naming at least one or two younger people to succeed your initial choice should ensure your estate is successfully brought to closure without excessive court intervention.

4. Incorrect Will Execution

For people drafting their own wills, this is the moment of truth… and the point at which many well-drafted wills are made completely ineffective. We have seen more self-drafted wills fail due to improper execution than all other reasons combined. Wills require your signature (or someone signing for you at your explicit direction and in your presence) at the end of the will in front of two disinterested witnesses. The witnesses cannot be beneficiaries of your estate. And they may need to sign an affidavit in front of a notary. Failing any of these steps may cause your will to be invalidated. The sole exception is the notary requirement for the witness affidavit: They may be able to sign the affidavit after you die … but your executor will need to be able to read the witness’s names … and 50% of the time their signatures are little more than illegible chicken scratch that looks more like Sanskrit than a signature, meaning you can’t identify the witnesses.

5. Not Finding the Original Will

Finally, you need an original, signed will, particularly if you try to draft your own document. If an attorney drafted the will and it is subsequently lost, the drafting lawyer can sometimes verify a signed copy of the original will in a court during a lost will proceeding. Most states don’t allow these proceedings if no drafting attorney can be found, so when you lose your original will there is no one to question to prove its validity. Just so everyone is clear: An unsigned copy of a will is 100% useless and won’t be admitted to probate. We do not suggest drafting your own will, because what you create is sometimes worse than nothing at all. However, we appreciate that some people sometimes want to take a shot at directing their estate’s destiny. If you are one of these people, take note of these five suggestions before executing your document.

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. 

1099 Forms

What is a 1099 form? This is a record of payment from an individual or entity, showing a payment, generated for your records. The individual/entity sends a copy to both the payee as well as the I.R.S.1

Who might be sending 1099s? Clients send their freelancers 1099s, recording work performed. Banks send 1099s to reflect interest from a savings account. A state may send a 1099 for a tax refund. If the financial institution who handles your retirement account writes you a check, they will also send you a 1099.1

In any event, a 1099 includes the taxpayer identification number or Social Security Number of the payee. Receiving the 1099 does not automatically mean that the payee owes tax, as there could be situations that offset that income, but it definitely means that the I.R.S. also has a record of that payment.1

There are many types of 1099 form. Here are a few of them:

1099-A. This form is a consequence of foreclosure or bank repossession of secured real property – “acquisition or abandonment,” in I.R.S. terms. Lenders send it to the foreclosed party and the buyer.1

1099-B. Brokers and barter exchanges report proceeds from securities, futures, commodities, or barter exchange transactions with a 1099-B.1

1099-C. The 1099-C reports debt cancellation. You must claim the indicated amount on the 1099-C form as income in the year the debt was forgiven. When you pay income taxes on that amount, the creditor cannot come after the debt again. This form sometimes follows a foreclosure.1

1099-CAP. This one is for those who own shares in a corporation that has been acquired or has undergone a significant change in capital structure. If it was sold or changes have been made where you’ve earned cash or stock, for example, this form would be necessary.1

1099-DIV. When you receive dividends, capital gain distributions, or liquidation distributions, you get one of these. For example, when a mutual fund sells off funds and realizes a capital gain, the fund informs you of your share of the capital gain through a 1099-DIV.1

1099-G. This form reports payments from government agencies and qualified state tuition programs – everything from state and local tax refunds and unemployment benefits to agriculture payments, gambling winnings, and taxable grants. It is usually issued to show unemployment benefits or a state tax refund.1

1099-INT. This form reports interest income of $10 or more, and sometimes other tax items related to interest income (such as federal tax withholding or early withdrawal penalties).1

1099-LTC. As the LTC part hints, these forms report distributions (payments) from long term care insurance contracts and accelerated death benefits paid out as a result of a life insurance contract or a viatical settlement.

1099-MISC. This category includes “miscellaneous income,” including awards and prizes.1

1099-OID. The 1099-OID reports the difference between the stated redemption price of a bond at maturity and the issue price of that bond.1

1099-PATR. This form reports patronage dividends, such as in a farm cooperative.1

1099-Q. Have you been paying for school expenses from a 529 plan or a similar savings plan? Withdrawals will be reported on this form.1

1099-R. The 1099-R reports distributions from all types of retirement, pension, and profit-sharing plans as well as any IRA or annuity contract.1

1099-S. The 1099-S reports gross proceeds from real estate transactions or exchanges.1

1099-SA. This form reports distributions from Health Savings Accounts (HSA), Archer Medical Savings Accounts (Archer MSA), or Medicare Advantage Medical Savings Accounts (MA MSA).1

Questions? Are you thinking you should have received one of these forms? Or maybe sent one of these forms? Be sure to talk with a qualified tax professional or qualified financial professional today; they can help you generate, request, and understand the 1099 forms in question.

Why Having a Financial Professional Matters

What kind of role can a financial professional play for an investor? The answer: a very important one. While the value of such a relationship is hard to quantify, the intangible benefits may be significant and long lasting.

A good financial professional can help an investor interpret today’s financial climate, determine objectives, and assess progress toward those goals. Alone, an investor may be challenged to do any of this effectively. Moreover, an uncounseled investor may make self-defeating decisions. Some investors never turn to a financial professional. They concede that there might be some value in maintaining such a relationship, but they ultimately decide to go it alone. That may be a mistake. 

No investor is infallible. Investors can feel that way during a great market year, when every decision seems to work out well. In long bull markets, investors risk becoming overconfident. The big-picture narrative of Wall Street can be forgotten, along with the reality that the market has occasional bad years.  This is when irrational exuberance creeps in. A sudden market shock may lead an investor into other irrational behaviors. Perhaps stocks sink rapidly, and an investor realizes (too late) that a portfolio is over weighted in equities. Or, perhaps an investor panics during a correction, selling low only to buy high after the market rebounds.

Often, investors grow impatient and try to time the market. Poor market timing may explain this divergence: according to investment research firm DALBAR, the S&P 500 returned an average of 8.91% annually across the 20 years ending on December 31, 2015, while the average equity investor’s portfolio returned just 4.67% per year.1            

The other risk is that of financial nearsightedness. When an investor flies solo, chasing yield and “making money” too often become the top pursuits. The thinking is short term.

A good financial professional helps a committed investor and retirement saver stay on track. He or she helps the investor set a course for the long term, based on a defined investment policy and target asset allocations with an eye on major financial goals. The client’s best interest is paramount. As the investor-professional relationship unfolds, the investor begins to notice the intangible ways the professional provides value. Insight and knowledge inform investment selection and portfolio construction. The professional explains the subtleties of investment classes and how potential risk often relates to potential reward. Perhaps most importantly, the professional helps the client get past the “noise” and “buzz” of the financial markets to see what is really important to his or her financial life. 

This is the value our PFG financial professionals bring to the table. You cannot quantify it in dollar terms, but you can certainly appreciate it over time. For more information contact us here.


1 – zacksim.com/heres-investors-underperform-market/ [5/22/17]
PFG Private Wealth Management, LLC (“RIA Firm”) is a registered investment adviser located in Tampa, FL. PFG Private Wealth Management, LLC may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. 
Accordingly, the publication of PFG Private Wealth Management, LLC’s online material should not be construed by any consumer and/or prospective client as PFG Private Wealth Management, LLC’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation.
This information is provided for information purposes only.  Investments involve risk and unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy.  This material and information are not intended to provide investment, tax, or legal advice.
Insurance products and services are offered and sold through Perry Financial Group and individually licensed and appointed insurance agents.
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Regrets By Retirees

retirement planning

Have you ever tackled a DIY (Do-It-Yourself) project and in the end regret how it turned out? Or when you read the online forums it said the average time was thirty minutes and two hours later you’re still at it? Well I have and half way through I wished I would’ve paid someone to do it. Life is full of failures and with it inevitably come regrets. In the end you have two options: learn and improve or sulk and stink. Retirees tend to look back more than others and some of their wisdom may be worth listening to.

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