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Common mistakes with estate planning

On Behalf of | Nov 23, 2020 | Estate Planning

Many people neglect to make an estate plan for various reasons. Putting off the creation of an estate plan is never a good idea, especially because it can lead to certain detrimental oversights. There are several errors in estate planning that are actually quite common. Fortunately, they are relatively easy to pinpoint and correct, should California families find that they have made a typical mistake in creating their estate plan.

One common area where people often miss the mark has to do with their beneficiaries. Some people don’t name a beneficiary to an account when they set it up, or they do not take the proper action to ensure it is valid. Even basic bank accounts should have a beneficiary listed to avoid that asset needing to go through probate. For those who make the effort of listing a beneficiary, they may mistakenly designate a minor. Unfortunately, kids cannot legally take over certain financial assets, such as an inheritance or investment account, so the estate owner should designate a guardian for the child.

Other mistakes involve the management of certain financial assets. Many people decide to establish a trust as part of an estate plan, but then they neglect to fund it. This may require documenting the transfer of certain financial accounts to the trust that will enact either before or after the trust owner’s death. For those who create a retirement account, they may neglect to consider tax implications that could prove costly to heirs. Many find that putting assets into a Roth IRA avoids this problem as it may not be subject to taxation upon distribution.

Of course, the gravest error is not having an estate plan at all. The easiest way to remedy this misstep is by working with an estate planning attorney. California families can make use of an attorney’s knowledge when deciding how they want their assets handled after their passing. It may seem like a difficult task, but it is one well worth undertaking.


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