Everyone has probably caught themselves thinking that they do not need an estate plan and can get away with passing their estate to their beneficiaries without any hassle. To the contrary, many of these ideas are mistakes that can be detrimental to your beneficiaries. You want to leave a good memory of yourself after you pass, and avoiding the following mistakes will ensure that.

 

THINKING THAT A WILL IS ENOUGH

 

If you have a will, your assets will go through probate! More protection, via a trust, is necessary to avoid the probate process. By having a will, you enjoy the privilege of telling the State of California the beneficiaries you intend to inherit your estate, however, you do not avoid the costs, both financial and in time, associated with probating an estate. Remember, probate is unnecessary, time consuming, public and very expensive!)

 

PARENTS OWNING PROPERTY IN COMMON WITH CHILDREN

 

If you intend for your children to own your real property when you pass, your children should inherit your property through a trust and NOT own it in common with you while you are alive. State law enables your children to receive a “step up basis” on the property value if they inherit property at your death. For example, if you purchased your home in 1950 for a value of $15,000.00 and today the fair market value is $500,00.00, if your children inherit this property at your death, they realize ZERO capital gains. If you own your property in common with your children, they WILL realize capital gains depending upon the appreciation value of the real property and how title was held. Further, your children will not be able to take advantage of property tax exclusions if they do not inherit the real property through a trust or a will.

 

PARENTS OF MINOR CHILDREN WITHOUT AN ESTATE PLAN

 

Parents with minor children need an estate plan to ensure guardians have been selected to care for minor children if mom and/or dad die suddenly. An estate plan is also needed to avoid probate to ensure your children do not inherit everything outright at the young age of eighteen.

 

BLENDED FAMILIES DO NOT NEED ANY EXTRA PLANNING

 

Blended families always need an estate plan to avoid unintentionally disinheritance of stepchildren. At a minimum, you and your spouse should have a will to ensure stepchildren are acknowledged to avoid disinheritance.  Your surviving spouse can always revoke a will upon your death so a trust is preferable for maximum protection!

 

ASSETS VALUED AT $150,000 OR MORE DO NOT REQUIRE

ANY SPECIAL PROTECTION

 

If the net value of your estate is $150,000.00 or more and if you do not have a trust, your assets will go through probate!  Your loved ones will lose substantial monies in court fees, court costs and attorney fees that could have been completely avoided if the property was titled in the name of a trust!

 

 

FAILING TO TITLE ASSETS INTO THE TRUST

 

Your trust is only as valuable as the assets titled in the name of the trust.  To avoid probate and save time and money by avoiding probate, you must title all of your assets into the name of your trust.  Ensure you update your beneficiary designations on your life insurance, annuities and/or tax deferred accounts. It is prudent to check title on all of your assets to ensure they are titled in your name as trustee of your trust.

 

If you have caught yourself thinking along the lines of these common mistakes, it is not too late to remedy the situation. Call today to schedule your complimentary appointment!