Do you monitor your estate plan as often as you should? Much like regular car maintenance, tuning up your estate can help you avoid big problems later.
First and foremost, do you even have a plan? Many people with little or no property assume they do not need a Will or other estate documents. But this is simply not true. Who will care for your children? Do you want your loved ones to put you on life support if needed? Not planning your estate would allow state laws, or a stranger apointed by the Court, to dictate what happens to your children, your life and your property.
Another common estate planning mistake is not considering taxes. Estate tax laws are currently in a state of confusion. Last year the laws affected estates worth more than three and a half million. This year that law has lapsed and next year the amount may revert to a previous figure of one million unless Congress decides otherwise. You must pay close attention to changes in tax laws during estate planning to ensure your estate isn’t eaten up by hefty tax bills. Of course, a good estate planning attorney will be able to advise you of the best avenues to minimize estate taxation.
Do you regularly update beneficiaries for life insurance policies and other financial accounts? Many people forget this very important part of estate planning. They also often forget to update the amount of their life insurance policies to ensure loved ones will have enough money for living expenses.
Another common mistake is not being aware of gifting laws. If you have joint ownership of any property with a person besides your spouse, that person may have to pay taxes when you pass away. You can avoid this by gifting the item to the person before your death. Each year, you can gift a certain amount of your property to loved ones without them having to pay taxes on it.
Did you know that if you and your spouse intend to leave property to your children, you may help your spouse and children avoid large tax bills by leaving this property in a Trust? At your death, the Trust would pass to your spouse who would have full control until his or her death, and then the Trust could pass easily to your children.
The best way to avoid all of these estate oversights is to speak with your attorney and update all Wills, living trusts, life insurance policies and financial accounts. Preparation now will help your family have a smoother transition later.