6 Common Estate Planning Mistakes and How to Avoid Them

 

6 Common Estate Planning Mistakes and How to Avoid Them


Making sure that your estate is in the right hands requires knowing what not to do. Here are common estate planning mistakes and how to avoid them.

 

Nearly 50% of Americans over the age of 55 don't have a will. Too many people put off estate planning until it's too late. 

Do you know what will happen if you die without a will? Do you have any other estate planning strategies in place?

Not having an estate plan is a big problem, but there are other estate planning mistakes that are easy to avoid. Here are our top six mistakes when making estate plans. Keep reading to learn more.

1. No Plan

Without a will or trust, you give control to the state to make the big decisions. The state can distribute your property and assets and without a designated guardian, a judge picks the guardian if you have children under the age of 18. 

Another big mistake is a couple assuming everything goes to their living spouse upon death, but this isn't always true. In some states, the property owned by the deceased is divided between surviving spouse and children. By having a written estate plan, you can trust that your personal and financial affairs are handled properly. 

2. Not Planning for Estate Tax Liability

Under the U.S. Estate Tax Law, taxes are imposed upon the transfer of the estate after death.  

Because of the Tax Cuts and Jobs Act (TCJA) of 2017, the federal exception is $11.4 million per person that's excluded from federal estate taxes. In 2025, this law goes back to the previous $5 million per person. 

While many Americans don't have to pay estate taxes, those that do have options to reduce liability and need to make appropriate plans before death. 

3. No Plan for Disability and Long-Term Care

People 65 and over have a 70% chance of needing long-term care. That number is too high not to ignore. 

Plan ahead by looking into disability and long-term care insurance policies. Don't wait too long because every year, price increases.  

4. Not Updating Estate Plans

You need to update your estate plans after changes in family or business structure such as birth, death, divorce, moving to a different state, or property acquisition.  

Update your estate plan to make sure your wishes align with your will.    

5. Putting Other Names on the Deed

Adding names onto the deed isn't doing anyone a favor. 

Under the U.S. Gift Tax, any gift over $15,000 is subject to taxation. Not only are there taxes, but you're exposed to creditors from other names on the deed who may be able to recover from your assets if there are financial or legal problems. 

6. Not Transferring Life Insurance Policies

Upon death, the IRS can tax your life insurance policy. To avoid this, set up a life insurance trust, which is an irrevocable trust that is both the owner and beneficiary. With this trust, your life insurance proceeds won't be heavily taxed and beneficiaries won't have to wait months for a payout. 

Don't Make These Estate Planning Mistakes

Avoid making estate planning mistakes and prepare for death with an estate plan. Planning for your death minimizes the chance of family and legal battles, allows you to name your children's' guardian, reduces taxes, and lets you decide who gets what.  

If you want to take a step towards protecting your loved ones after death, consider shopping for a life insurance agent and get a quote today.  

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Your children deserve to be protected financially whether you live to a hundred or die tomorrow. Life insurance is an easy and affordable way to make this happen. 

 

 

Visit GYKAM.com today for a fast and easy quote on life insurance.

 

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6 Common Estate Planning Mistakes and How to Avoid Them