Proper estate planning gives you the opportunity to make informed decisions about the future of your estate. Having an estate plan in place is highly beneficial as it allows you to maximize the value of assets you leave to your successors.
Familiarizing yourself with common estate planning mistakes can help you avoid encountering these issues in your legal affairs.
Forgetting a contingency plan
When you first begin working on your estate planning documents, you need to select someone who will serve under powers of attorney or as your trustee or executor. Additionally, you need to find people you can name as alternates to these roles, in the event that something happens. If you fail to include a contingency plan in your will or trust, the probate court will determine the successor executor or trustee.
Not considering income tax
If you do not consider income tax and give your assets to your loved ones before your death, you end up doing your family a major disservice. However, if your beneficiaries inherit the property after you die, they will not have any income tax consequences. Unrealized gains or losses disappear since an individual’s tax basis in inherited assets retains the value of the property on the date of your death.
Naming minors as direct beneficiaries
Any child under the age of 18 years old cannot receive assets directly from your estate. Instead, a court appoints a guardian to hold property from your estate for the child. You can save a step in the probate process by designating a trustee or custodian in your will for any minor children you name as beneficiaries.