It's important to have an estate plan in place so that your wishes are carried out after you pass away. Here are some mistakes that you want to avoid when it comes to having an estate plan.
Not Having A Will
Many of the decisions and property distribution by default will go to your spouse when you pass away. However, you may not want that to happen in your specific situation, or not have a spouse to make those decisions. Having a will is crucial in making sure what your desires are, which includes who you want to make those end-of-life care decisions about you, and who has guardianship of your children.
Not Having Life Insurance
Life insurance can play a key role in your estate planning, especially if you do not have much of an inheritance to pass on. A life insurance policy can help pay for funeral costs, college education for children, and things of that nature. A life insurance policy is worth considering when you will not have cash and assets on hand to leave behind the type of inheritance that you want to give.
Not Holding Onto Assets While Alive
Many people think that they need to give assets away to people while they are still alive to avoid having the assets go through probate. There are tax advantages of having high-value assets pass along to heirs after you pass away. What you can do is gift money to family members that is within the legal limits where they do not have to pay taxes on it. Working with an estate planning lawyer can help you better understand the tax laws concerning step-up in basis, which is the law regarding the tax benefits that people receive when inheriting assets after your death.
Not Understanding Beneficiaries
You likely have some accounts where you need to identify a beneficiary on the account, which is common for bank accounts, life insurance policies, and investment accounts. Know that these items do not need to be listed in a will or go through the probate process, since having a beneficiary is deciding who that asset goes towards. Having conflicting information, such as different people listed as getting an asset in your will and as the official beneficiary, can cause a lot of unnecessary confusion after you pass away. That's because the beneficiary would be the one that has the legal right to the asset.
To get help with estate planning, talk to a law firm in your area.
Share18 October 2021
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