You could write a concise, all-encompassing will in California, but a single mistake could throw the entire will into question. You could also leave your will in the hands of the wrong person, resulting in a conflict of interest. Here are a few common estate planning mistakes that most people should avoid.
What are some serious estate planning mistakes?
When you write your will, you’ll need to choose someone to execute your will after your death. Your first instinct might be to choose your spouse, child or another close family member to execute your will. However, this individual is so close to your estate that it might cause a conflict of interest. Other relatives might even launch will and trust contests because they don’t believe that this person is objective. Instead of choosing a family member, you might want to choose a neutral third party like an estate planning attorney.
If you’re giving your house to a friend or family member, you shouldn’t write their name directly on the deed while you’re still living. Unless your house is worth less than $14,000, you’ll be giving this individual a large gift that comes with a lot of taxes. Instead of giving them the house directly via the deed, you can leave them the house in your will so that they won’t have to deal with gift taxes.
Similarly, the IRS will subject your life insurance policy to estate taxes after your death. Your family members might get only a percentage of the full payout. To protect your insurance policy from the IRS, you can place it in a life insurance trust. This gives your life insurance policy directly to your beneficiaries after your death. They won’t have to wait for probate to be over or sacrifice part of their funds to the IRS.
How can you avoid other common mistakes?
One of the biggest mistakes you can make is not hiring an attorney. If you don’t take taxes, local laws and other issues into consideration, your family might lose a percentage of their inheritance. It’s wise to talk to an attorney about maximizing your inheritance for your beneficiaries.