Despite popular belief, you do not need to be rich, elderly or sick to have an estate plan. If you have a house, car, money in the bank or cherished belongings, you can benefit from creating an estate plan. Not only can a plan help you maximize the value of your estate, but it also allows you to have a say about who gets which assets when you pass. That said, FindLaw warns that there are certain estate planning mistakes of which you should be aware so that you can avoid making them—the first of which is not having an estate plan.
In our previous post, proper funding of trusts, updating estate plans, and including financial and medical powers of attorney were some of the common things that many people failed to do. Here are a few more mistakes to avoid.
Avoid tax on your home
FindLaw also suggests against putting your children on the deed to your home. In doing so, you are giving your child a large taxable gift. To avoid taxation on your family home, create an estate plan that allows you to pass your home to your children via an inheritance.
Speaking of gifts, many people fail to include gifts in their estate plan. The IRS allows individuals to gift up to $14,000 tax-free. Take advantage of this allowance to reduce the amount of taxes your loved ones will have to pay on your estate.
Make use of a life insurance trust
Another mistake individuals make is failing to utilize a life insurance trust. When you die, your life insurance policy will be subject to a sizeable estate tax, which means your beneficiaries get less of the money you put aside specifically for them. A life insurance trust can help you avoid this tax by acting as the owner of the policy.
The content shared here is for educational purposes only. It should not be used as legal advice.