How can I avoid making costly estate planning errors?
Estate planning is often one of the last things that people consider when they analyze their finances. While some of us will eventually end up making an estate plan, many others die before ever creating an estate plan that protects their families left behind. Estate planning is a vital part of your legacy and should be an important task on your financial to-do list. As you set out making an estate plan in California, be aware of the following errors, which could cost your family greatly in the long run.
Mistake #1: Assuming an Estate Plan is Only for the Elderly
While none of us want to contemplate our own mortality, the fact is that accidents and illnesses can strike those of any age. It is imperative that adults of all ages have an estate plan in place in the unfortunate event of an unexpected accident or illness. Without an estate plan, your assets will be distributed in accordance with California’s intestacy laws. Your unmarried partner, stepchildren, and other valued family members could be left out of your inheritance unless you take steps to protect your family now.
Mistake #2: Thinking You Do Not Need an Estate Plan Unless You Are Wealthy
There is a general stereotype that estate planning is for the wealthy. The truth is that everyone can benefit from an estate plan. An estate plan involves much more than shielding assets from taxes. In your estate plan, you can dictate who can make decisions on your behalf if you become incapacitated, who will care for your minor children if you die, and so much more. Everyone over the age of 18 needs an estate plan, no matter their net worth.
Mistake #3: Ending Your Estate Plan with a Will
Wills are generally the first estate planning tool you will create. Wills are an important part to any estate plan, but your estate plan should not stop with just a will. While your will can ensure your assets go to whomever you desire, your assets will still need to go through probate and could be subject to tax penalties. Your estate planning attorney will evaluate your finances to determine whether you should consider forming a trust or using other estate planning tools to protect your assets.