Often it can be too easy to put off making an estate plan or updating an existing one. Do not wait for something unexpected to happen. Here are 5 mistakes to avoid before it’s too late.
1. Not Having a Plan
Even if you do not feel that you have enough assets to warrant a living trust or a will. It is still important to create a power of attorney and healthcare directive. These allow you to appoint a trusted friend or family member to make financial or medical decisions for you should you become incapacitated. If you do not have these documents in place and you become incapacitated your loved ones will be forced to go through a court process to be able to act for you.
2. Not Having a Plan that Works for You
You may have created an estate plan many years ago, but does it still meet your current needs? For example, married couples often made A/B split trusts for estate tax purposes. These require their living trust to be divided into subtrusts upon the death of the first spouse, which can have administrative costs and unintended tax consequences. Most couples no longer need this trust structure since the estate tax exemption is so high.
3. Not Planning for Incapacity or Long-Term Care
You should ensure that your estate plan has appropriate language in it to allow your family to do further planning on your behalf for incapacity and to ensure that they can qualify you for benefits that may assist in paying for your care.
4. Not Planning for California Property Taxes
If your intention is to pass on real property at your death, be sure that you understand how reassessment works and that you take advantage of exemptions to reassessment (parent to child transfers and transfers between spouses). If you do know your property will be reassessed because you decide to leave it to a partner (not a spouse) or another person, be sure that you understand how much their property taxes will increase—you may be able to assist that beneficiary elsewhere in your estate plan.
5. Not Updating Your Plans
You should typically review your estate plan every three to five years. The right time for review, however, does depend on your individual circumstances and important developments throughout your life. Different life events/developments that should prompt you to take another look at your estate planning documents including: A Change in Intentions; A Change in the Law; A Change in Your Relationships; Becoming a Grandparent; Losing a Spouse; and, Bad Health.
If you have yet to make an estate plan or have questions about your existing plan, please call us at (408) 402-4064 for a complimentary consultation and/or estate plan review.
All materials have been prepared for general information purposes only to permit you to learn more about our firm, our services and the experience of our attorneys. The information presented is not legal advice, is not to be acted on as such, and may be subject to change without notice.