Almost everyone in California knows that it’s important to have an estate plan, but most people do not know everything a plan can do. This can have consequences for the testator and their family. Not only can you cost your heirs unnecessary time and money with help from an experienced estate planning lawyer, but you could also end up with an incomplete plan. Your golden years could be less comfortable and rewarding than they might have been had you planned properly.
Here are six common estate planning mistakes people in the San Francisco Bay Area make:
- Not thinking about tax consequences. Currently, the exemption for the federal and California estate taxes is more than $11 million per person. You might not have more than $11 million in the bank, but consider the value of your home, as well as what you might earn in the future. For many people, there are ways of getting around estate taxes, but only if you plan ahead.
- Failing to plan for possible long-term care needs. While nobody wants to live in a nursing home, someday, it might be your best option if your health prevents you from living independently. For most people, affording long-term care is very difficult. Long-term care planning can help make assisted living affordable.
- Keeping your plan the same over time. Say you set up your estate plan 10 to 20 years ago. There is a good chance that people have come in and out of your life in that time. Your estate plan should reflect these changes. For example, if you have had more children or gained grandchildren since you set up your estate plan, you may want to add them as heirs. Or if the person you designated as executor of your estate has died, you should choose someone new.
- Improper asset ownership. Whether it was done on purpose or accidentally, the way you own your property can affect how it gets distributed when you pass away. For example, joint ownership of property between spouses can make transfer easier when one spouse dies.
- Forgetting charitable contributions. Many people want to share part of their legacy with a charitable organization they care about. You can use your estate plan to support a favorite cause.
- Not having an estate plan. When a Californian dies without at least a valid will, they are said to have died “intestate,” and state law dictates who will inherit their assets. Your entire estate may have to pass through probate.
The best way to ensure that your estate plan will achieve your goals for your long-term health and your legacy is to work with an experienced estate planning attorney.
