When planning your estate, ensure you keep an eye out for these big mistakes and avoid them. In addition, contact a professional estate planning attorney for help when planning your estate.
7 Big Estate Planning Mistakes
- Losing the Portability of a Spouse’s unused exemption
Before the law was modified in 2010, an important part of the estate planning process for married process was to equalize the value of assets in which each couple had legal title. Then, each spouse had a different lifetime estate and gift tax exemption. However, the exemptions couldn’t be shared.
A married couple potentially could escape estate taxes on a joint estate worth up to two individual exemptions. However, they had to jump through some hoops.
The joint exemption wasn’t preprogrammed.
If when the individual exemption was $3 million a couple had an estate of $7 million. Of that, $1 million was in the wife’s name, and the remaining $6 million in the husband’s name. None of it was jointly owned. If the wife passes on first, her lifetime exemption would protect only $1 million of the joint estate.
The husband would be left with a $3 million exemption to protect a $6 million estate, if the wife left her $1 to the children or a bypass trust.
Since the lifetime exemptions couldn’t be shared between the spouses and the estate mainly was in the name of one spouse (the wife or husband) about $3 million of this estate was prone to estate taxes.
- Failure to properly title assets
Both inside and outside of trusts, the way in which you own assets make a huge difference. For example, if you own properties as joint tenants with rights of survivorship, the assets will go to the other designated individual, like your spouse after your passing.
Not only is titling assets important, you should examine these designations regularly, just as you should your beneficiary designation. .
- Failure to set up a trust
Failure to set up a trust is another deadly estate planning mistakes. Aside from being a tool used to facilitate the transfer of assets, a trust can also be used to bypass the expensive, stressful, and time-consuming probate process. Failure to set up a trust, will leave your estate at the mercy of probate.
- You don’t understand your estate plan:
Surprisingly, there are many people out there who don’t understand their estate place regardless of the guidance of a competent estate planning attorney. Simply signing estate planning documents, and not knowing what you are signing, or what it manes can be an issue.
- Failure to create a power of attorney
A power of attorney is a legal document that allows you to choose an individual who will make decisions for you if you become incapacitated. Failure to create this document will give the court the right to select an individual to make those decisions on your behalf.
- Failure to update your estate plan
An estate plan is not something you create and lock up in your cupboard till you pass on. You need to update your estate plan regularly, especially after a significant event or occurrence like a divorce, the birth of a child, etc.
- Failing to create an estate plan:
The first estate planning mistake on our list is the failure to create an estate plan. If you fail to create an estate plan that comes with a will, your assets might end up being distributed according to state law, irrespective of your wishes. To prevent this from happening, ensure you create your estate plan before it’s too late.
Need an estate planning attorney?
Planning an estate can be a complicated process. It involves a lot of paperwork and legal documents like power of attorney, trust, will, etc. Thus, if you want to plan your estate the right way, it is important that you contact a professional.
An estate planning attorney can help you in several ways. This professional can help you plan your estate and help you create the necessary estate planning documents. If you need to update your estate plan, this professional can be of help as well. Also, if you have concerns or questions, contacting an estate planning attorney is the best way to find answers.
We boast of competent estate planning attorneys who can help you navigate the tough estate planning process. Simple get in touch with our office so we can offer you or your loved ones our professional services.
