10 Mistakes to Avoid When Planning Your Estate
Planning your estate is hard work, but paying attention to a few essential tips can improve the legacy of your estate significantly. As an estate and elder law firm committed to your success, we’re here to help you avoid headache and complications when planning your estate. Keep reading to learn about 10 common estate planning mistakes and how to avoid them.
- Procrastinating. Meet with an estate planning attorney sooner rather than later to help you at least draw up a basic estate. This will save you stress and ensure your estate is in the best possible condition.
- Not Updating Your Will and Estate Plan
With many changes happening within a family or business structure such as births, deaths, divorces, and new property acquisitions, it is wise to perform a periodic update of your will to ensure that assets go to who you intended. Retirement expert for Forbes says that outdated beneficiary designations are one of the most devastating mistakes that attorneys deal with. Remember that if you change beneficiaries in your will, there are other documents that need to be updated as well! Explain your wishes to your estate planning attorney to make sure all essential documents are conducive to the legacy you want to leave. Forbes warns that failing to properly update beneficiaries can lead to assets going to ex-spouse, deceased persons, or other unintended recipients.
- Not Planning for Disability
An unexpected or long term disability can have significant consequences on your personal and financial affairs. Decisions such as who will handle your finances, raise your children, or make your healthcare decisions are extremely important. Appoint a power of attorney and/or create a living trust to work on your behalf.
- Not Reducing Taxes Through Gifts
Did you know you could be adding money to your estate every year? Start saving money on estate taxes and start giving gifts away now. According to the Internal Revenue Service, gifts up to $15,000 a year per spouse may be excluded from estate tax. So give gifts to individuals, groups, or businesses and positively impact others while avoiding heavy taxation on your estate.
- Putting Your Child’s Name on the Deed
It might seem like a generous gesture, but you are essentially giving your child a hefty tax obligation. While gifts up to $15,000 are excluded from estate tax, gifts more than $15,000 per spouse are taxable. Additionally, with a gift, the child will maintain your cost basis in the home and pay capital gains when it is sold. Instead, create an estate plan that allows your child to inherit the home. Inherited property gets a step-up in basis so that the property’s cost basis for capital gains purposes is the value on the date of your death.
- Choosing the Wrong Person to Handle Your Estate
The best executor of your estate isn’t always the first person who comes to mind. For example, sometimes the people closest to you are too emotionally invested to objectively handle the duties and demands required of an executor, trustee, or guardian.
- Not Transferring Your Life Insurance Policies to a Life Insurance Trust
With large estates, a life insurance policy is subject to a hefty estate tax when you die, resulting in most of the proceeds going to the IRS instead of your intended beneficiaries. But you can avoid this by setting up a life insurance trust to act as the owner of your life insurance policies. This solution not only avoids insurance proceeds being heavily taxed, but it also spares your beneficiary the waiting period before insurance proceeds pay-out.
- Not Taking Advantage of the Federal Exemption
One of the easiest ways for married couples to save on estate taxes is to fully use the federal exemption for each spouse (set at $11.18 million per spouse in 2018).
- Not Meeting with an Experienced Legal Professional
Not meeting with an estate planning attorney is one of the most common mistakes, especially if you have complicated assets or doubts about your own ability to draft an estate plan. An experienced attorney can provide you with tax-planning strategies based on the particular needs and demands of your estate.
According to Forbes, one of the most common phrases that elder law attorneys hear from clients is “I don’t really know what I’m signing.” At Baby Boomers’ Barrister, our goal is for you to never have to say this! Whether it’s your estate plan or other legal document, we prioritize clarity by walking you through every aspect of your estate plan, will, or other document.
Have questions about your estate planning? The attorneys at Baby Boomers’ Barrister are here to make your estate planning process as smooth and stress-free as possible! Ensure peace of mind for you and your loved ones as you leave a legacy with confidence!
Contact our St. Petersburg office at (727) 565-4250 or online.
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