10 Common Estate Planning Mistakes
1. Procrastination. Simply failing to get around to it.
2. Believing that estate planning is only for the wealthy. When taking into account the people are often surprised at the size of their “estate.”
3. Not reviewing or updating your beneficiaries and will. Life changing events such as births, deaths of family members, divorces, and changes in general in your family structure can have a significant impact on how your assets are distributed.
4. Not having a tax-planning strategy in place. Current tax laws are complex and ever changing. There are strategies available to help you minimize taxes and avoid estate tax penalties. Sit down with your tax professional to implement advanced tax and estate planning strategies.
5. Take advantage of gifting. The government allows tax-free annual gifting of $13,000 per individual or $26,000 per couple annually to as many individuals as you choose. This is a means of giving away some of your estate tax free to family members.
6. Joint titling of assets. It is true that joint titling of assets may allow you to avoid probate, but do not overlook the additional risks; misappropriation of assets by the joint title holder, exposing of assets to a divorcing spouse of the joint account holder, exposing assets to creditors of the joint account holder.
7. Failure to provide someone you trust with the location of important documents. All of the work you have gone through in planning the distribution of your assets is worthless if nobody can find the documents.
8. Leaving everything to your spouse. The government offers an estate tax credit (repealed for 2010) by leaving all of your assets to your spouse you are sacrificing their share of estate tax credit.
9. Doing it yourself. Not seeking out expert advice.
10. Naming your estate as the beneficiary. By directing your assets to be paid to your estate “pursuant to the terms of your will” assets that would normally avoid probate-will become subject to probate which can be both time consuming and expensive.