People have goals to have a good week, a great year and a good life overall. These wishes for the future should extend to estate planning. Having an estate plan established is highly beneficial as individuals can make informed decisions about their estate and maximize the value of assets.
Avoiding common estate planning mistakes will allow the person’s successors to avoid major legal issues after his or her death.
Naming minors as direct beneficiaries
If a named beneficiary is under 18 years old, he or she is not able to directly receive assets. A court will instead appoint an appropriate guardian to hold any property the individual leaves to a minor child beneficiary. Designating a custodian or trustee in the will saves this step in the probate court process.
Forgetting a contingency plan
Selecting someone who will serve as a trustee, executor or under powers of attorney is a crucial part of estate planning. Since life is so unpredictable, it is smart to pick alternates to these roles. If the will or trust do not contain this information, the probate judge will determine who will serve as the trustee or executor.
Not considering income tax
People who do not consider how income tax will affect their estate end up doing their loved ones a great disservice. This mainly arises in situations where beneficiaries get their inheritance before the individual’s death. If the family members inherit the assets after their relative’s death, they typically will not face any income tax consequences. Overall, unrealized gains or losses disappear since a person’s tax basis in the inherited assets stays at the value of the property from the date of death.
A solid estate plan helps an individual leave a thought-out legacy.