Common Mistakes That Occur When Planning an Estate
While many individuals believe that estate planning is only necessary for people who have a significant amount of assets, the truth is that practically everyone should create an estate as long as they have at least one notable asset. In 2019, a study found that only 40% of respondents actually had a will even though more than 75% of them believed a will to be important. When you’re about to create a will or plan for your estate, it’s recommended that you call our estate planning attorney so that we can help you avoid making mistakes during the process.
Not Making Gifts in Order to Reduce Tax
Many people who make an estate plan without the assistance of a reputable estate planning lawyer make the mistake of not giving gifts under the estate plan in order to reduce the amount that their estate is taxed. For instance, gifts that are provided from one spouse to another can be wholly excluded from your estate tax. These gifts can amount to around $14,000 per year. By making these gifts now, you’ll be able to avoid a hefty estate tax later on.
Not Using the Federal Exemption
If you’re married, another tax break that you should look into is the federal exemption that’s available for spouses. Most individuals overlook this benefit, which means that that they’ve missed a great opportunity to reduce their estate taxes. Each spouse has an exemption for estate taxes that currently amounts to $11.18 million. While married couples were once required to create an exemption trust for this type of exemption, surviving spouses are now able to create a portability election, which essentially places any of the unused exemption of the deceased spouse into the estate of the surviving spouse. This means that the surviving spouse could double the exemption amount to which they have access.
Not Regularly Updating a Will
One of the worst and most common mistakes that people make is not regularly updating their wills. There is a myriad of things that can change in your life that would necessitate the alteration of your current will. If you get a divorce or there is a new birth within your immediate family, you might want to make some updates to your will. Any property acquisitions you make or changes that occur with your business structure should be addressed in the will. If you want to be certain that your assets are distributed to the correct individuals once you die, it’s highly recommended that you make updates to your will on a periodic basis, which could be anywhere from once per year to once every three years.
Not Planning Ahead
When creating a will, many people make the mistake of not planning for the unexpected. For instance, there could be a substantial change in the number of assets you have or new information about the poor handling of money by a direct beneficiary. It’s impossible to think of every scenario when creating a will or an estate plan. As such, you might want to consider placing at least some of your assets into a living trust, which allows you to have direct control over when and how your money is distributed. The trustee you assign to this account will follow any guidelines or stipulations you provide.
Not Consulting With Estate Planning Lawyers
Creating an estate plan is a lengthy and complex process that can be difficult to understand for practically anyone. The easiest way to make a mistake or two on your estate plan is to not have someone assisting you with its creation. If your assets are complicated or you find that you’re having difficulties with understanding the estate planning process, our lawyers can answer any question that you might have and will simplify the process for you.
If you ever require assistance with creating your estate plan or have encountered a problem with carrying out the will of a recently deceased family member, call our estate planning attorney in Hackensack today at (201) 996-1200 to schedule your first consultation.