Everyone can benefit from making an estate plan. Whether you have many assets or just a few, it is a good idea to plan for your future. When making your estate plan, it is vital to plan your estate carefully; otherwise you may open yourself up to common estate planning mistakes.
To avoid making mistakes while planning your estate, you should consult with an experienced attorney who can help. Our attorneys at Galanti and Copenhaver have many years of experience handling all forms of estate planning. We can help you design a plan that works best for your needs. Contact our office today at 707-867-0787 to schedule a consultation to discuss your future.
Mistake Number 1 - Failing to Update Your Will
Even when you have your estate plan in place, it is important to review it every so often to make sure it still reflects your wishes. As time goes on, relationships may change, and you may need to update your will. For example, additional children may be born and depending on how your will is written, you may need to update it to include the additional children as beneficiaries. Additionally, you will likely need to update your will in the event of a divorce o-r if one of your beneficiaries pass away before you do.
Mistake Number 2 - Not Making Gifts in Order to Reduce Your Estate Tax
One of the common estate planning mistakes is the failure to make gifts to reduce your estate taxes. The Internal Revenue Code allows you to gift up to $14,000 per year which will be excluded from estate taxes. If you are married, each spouse is allowed to gift up to $14,000, so as a couple, you can save $28,000 each year from becoming subject to estate tax.
Mistake Number 3 - Not Having a Plan in Place for Disability or Medical Incapacitation
One thing to keep in mind when you are going through the estate planning process is that you should plan ahead for the possibility that you become disabled or medically incapacitated. If you have an unexpected or a long-term disability down the road, it could have serious consequences on your finances and personal affairs. While you are planning your estate, you should designate someone to handle your finances if you are unable to do so.
Additionally, you will want to make sure that there is someone designated to make healthcare decisions on your behalf. If you have children, it will also be necessary to choose someone who will be the legal guardian of your children in the event you cannot take care of them. These are very important decisions, as you will need to designate someone you have full trust and faith in to act on your behalf.
Mistake Number 4 - Failure to Fund Revocable Trusts
A popular aspect of estate plans is a revocable or living trust. With a revocable trust, the assets you include in it are legally owned by the trust which allows these assets to avoid probate.
Unfortunately, a common mistake that occurs with revocable trusts is that the owner skips a step. The trust is officially created once the trust agreement has been drafted and all of the interested parties have signed the agreement. The next step is to fund the trust. Funding the trust means that the legal title for the assets in the trust are transferred over to the trust for ownership.
It is easy to transfer some assets, such as personal items. Personal items can be transferred to the trust by using simple language in the trust documents, or through a schedule of assets that have been designated in the trust agreement.
Real estate is more difficult to transfer, as the deed will need to be updated to reflect that the trust is the owner of the property. For vehicles, you will need to take the additional step of changing the registration to reflect the true owner. In addition, it is necessary to change the name of record on all financial accounts to reflect the trust as the custodian. There may be a lot of paperwork involved in fully transferring all of the assets to the trust, but it is a necessary step that is sometimes overlooked.
Mistake Number 5 - Failing to Hire an Attorney to Prepare Your Estate Plans
The most common mistake is failing to have an estate planning attorney prepare, or at least review your estate plans. This is particularly true if you have significant and complicated assets. By hiring an experienced estate attorney, you can help make sure your beneficiaries get the most out of your estate.