10 Estate Planning Mistakes To Avoid | Wiseman Bray Law
Believe it or not, estate planning isn’t just for famous or rich folks. In fact, most people have at least one item of value whether it is a car, home, or bank account. However, not many people realize that having an estate plan can actually benefit you. With an estate plan in place, you can better handle your assets as well as increase the profitability of the estate. Since most people have a hard time planning their estate without error, below are the top ten most common mistakes that you can avoid with the guidance of a professional, such as the Scottsdale Estate Planning Attorney locals have been trusting for years!
- Having No Estate Plan
One of the biggest mistakes you can make is having no estate plan in place. Having an estate plan set up before your death can help ensure your financial and personal assets are properly cared for when handed off to your heirs and beneficiaries.
- Wrongly Choosing the Person to Handle of Your Estate
Unfortunately, sometimes the person you choose to handle your estate isn’t the best match. For example, you may think that your spouse is the best option for handling your estate when you’ve passed, but they may be too emotionally distraught to be a trustee. As an alternative, you might consider choosing someone who is a little more removed but just as responsible to manage your estate.
- Not Using Your Spouse’s Federal Exemption
Married couples often find that the best way to save on estate taxes is to take advantage of their federal exemption of $675,000 per spouse. This way, if your husband or wife dies, a small part of the estate will be saved under an exemption trust, otherwise known as the credit shelter trust.
- Not Making Gifts to Reduce Your Estate Tax
One way to reduce your estate taxes is to offer gifts under your estate plan, that not too many people take advantage of. In fact, the Internal Revenue Code decrees that each spouse can gift up to $14,000 per year that can be taken from their estate tax.
- Not Consulting With a Tax Professional
Not consulting with a tax professional is a common mistake that can be easily avoided. A tax attorney can offer you a number of estate tax-planning methods that can meet the needs of your estate and offer you peace of mind knowing your estate is being taken care of.
- Not Regularly Updating Your Will
When a major life change occurs such as the death of a loved one, a birth in the family, divorce, etc. it signals a good time to update your will. Otherwise, you may provide assets to someone who has already passed away or is someone you no longer want to include in your will.
- Putting It Off
Planning your estate is not something you want to procrastinate about. Meet with a lawyer who specializes in estate planning sooner rather than later.
- Naming Heirs on Your Deed
Though it may seem like a good idea, putting your child’s name on the deed to your home is basically the same as gifting them a lot of taxes. Unfortunately, depending on the state in which you live, gifts valuing over a certain dollar amount may be included in estate taxes. Check with an estate planning attorney to see how to minimize or eliminate taxes associated with your estate.
- Not Transferring Your Life Insurance Policies to a Life Insurance Trust
When you pass away, your life insurance policy is subject to an estate tax. This means less of your money will go to your family and beneficiaries and more of it will go to the government. You can establish a life insurance trust to avoid this tax and prevent the stress your beneficiaries may feel if they have to wait months for their insurance payment.
- Failing to Plan for Disabilities
Sudden and long-term disabilities can be catastrophic for your finances and your personal life. It is very important to make decisions about who will raise your children, make financial choices, and handle health care decisions. Choosing a power of attorney and creating a living trust can be good options for those who may become unable to take complete care of themselves.
A special thanks to our authors at Arizona Estate Planning for their expertise in Probate and Estate Law.