Estate planning is the process in which we anticipate and arrange the disposal of our assets (property) during our life. It also involves the people around you, including family, friends and sometimes charitable organizations. Its purpose is to take into account your needs if you become unable to do so yourself. Estate planning involves three things: a will, a trust, and a living will/proxy.
Here are common mistakes people make when planning for their estate.
1. Having No Estate Plan
It seems an obvious point but many people mistakenly believe that you have to have considerable assets, you have to be a certain age, or your don't have the time or money to plan your estate. This couldn't be further from the truth. Planning for your estate will ensure all of your personal and financial matters are handled.
2. Neglecting Your Will
Throughout your life, there will be many births, deaths, marriages, divorces, property exchanging hands, and so on. Thus, to ensure that the assets you leave behind end up in the hands you wish, updating your will is paramount to the success of the document.
3. Not Incorporating Disability
Most people think that an estate plan is simply about death, this is simply not true. In fact, an unexpected or long illness, or disability could have more impact on your finances and assets than death. This is why it is very important to appoint a power of attorney and create a living will/trust to handle issues that you may not be able to.
4. Not Including Gifts to Reduce Estate Tax
According to the IRS (who recently lifted the limit on unified gift and estate tax) a percentage of what they deem as gifts are excluded from taxes. From a recent article on the subject:
Starting next year, people who have done some estate planning and made the maximum tax-free transfers to their families can take another crack at it. Beginning January 1st 2014, the amount folks can pass on during life (and at their death) completely free from federal estate tax will increase by an additional $90,000.
For more information on the amounts specific to you and your estate, it's best to speak to a qualified lawyer on the subject.
5. Choosing the Wrong Executor, Trustee, or Guardian
The wrong choice can hurt you in the end. This is why keeping your will up-to-date is important. Further, choosing a spouse or child may not be the best decision. Deciding on someone who is objective, impartial, and who is not personally invested might suit the situation better.
For additional information on estate planning, wills, living wills, and trusts, please contact us, or call us today (888)-910-6652 for your free consultation with on of our Torrance estate planning attorneys today.