In the last post, we addressed some of the most common mistakes to avoid when planning your estate, as well as how you can avoid them yourself. However, estate planning is no easy task, and without the expertise of an estate lawyer, you too could make a critical error. Here’s part two of our guide that will address some more common mistakes to avoid when planning your estate.
Not having an estate plan at all.
This is easily the most common mistake you’ll see regarding estate plans. An estimated 55% to 70% of Americans don’t have an estate plan or even a simple will. But the fact is that making a well-formed plan with experienced estate lawyers can help your loved ones handle your assets properly after your death.
Not updating your will.
This is another common mistake, but sometimes, it can be almost as damaging as not having any will or estate plan in place at all. It’s crucial to take some time to update your will periodically to reflect familial and/or financial changes like births, death, divorces, property acquisitions, and more.
Not choosing the right person to handle your estate.
Many people make the mistake of choosing the wrong person to handle their estate. FindLaw explains, “Sometimes the person you think is the best choice for executor of your estate is not always the case. For example, while you may think your spouse or child may be best suited to handle the affairs of the estate when you are gone, there may be someone else who is not as personally invested to objectively handle the extensive duties and demands required of an executor, trustee, or guardian.”
Neglecting to take the federal estate tax exemption per spouse.
Finally, it’s important to keep in mind that married couples can save on estate taxes by taking advantage of the federal estate tax and gift tax exemption for each spouse. Talk to an estate lawyer for more information about this money-saving condition, as this can be a difficult rule to understand.
In the past, the federal estate tax exemption was a mere $675,000, but the exemption has risen to $5.49 million, per spouse, as of last year. However, thanks to the Republican’s Tax Cuts and Jobs Act, signed into law by President Donald Trump in late December (just in time for Christmas), the estate tax exemption has doubled for 2018. For anyone hiring an estate planning lawyer this year, the tax plan was a major gift.
The estate tax exemption rose from $5.49 million to $11.2 million in assets that can be sheltered from federal estate taxes. That means a couple can exempt up to $22.4 million in assets between 2018 and 2025, at which point Congress will need to act again to extend the exemption.
Ultimately, avoiding these mistakes is the key to proper estate planning. It’s also critical to hire an estate planning lawyer who’s equipped for the job. For more information about estate planning, contact Baird Mandalas Law.