Estate Planning written on a board

Trying to figure it out on your own may seem like a good idea, but because of the complexities of the different laws, some simple little mistakes can be costly later on. A few procedures taken now could save your beneficiaries thousands of dollars in legal fees and taxes in the future. This is one of the main reasons why it is important to contact an estate planning attorney in Lakeport CA.

Here are five of the most common estate planning pitfalls to avoid in estate planning:

1. Ignoring the importance of estate planning

It might be difficult and even frightening to consider your legacy plans. However, correctly creating your estate plans now can save your loved ones not only money but also a lot of mental anguish after you pass away.

2. Beneficiaries Not Properly Designated.

One of the most typical estate planning blunders is failing to properly designate primary and alternative death beneficiaries on accounts that are supposed to pass to death beneficiaries outside of one’s trust.  This includes retirement accounts, insurance policies, and pay on death bank accounts.  Otherwise a costly and time consuming probate may become necessary.

3. Naming A Minor as Will Beneficiary

Until a child reaches the age of 18, they are a minor and do not have the legal authority to take control of inheritance or investment accounts.  If a minor is becomes a beneficiary of an estate, a court-appointed guardianship will be formed to oversee and manage the assets on the kid’s behalf.  Of course, such inheritance can remain outside a guardianship by administering it inside of an ongoing trust for the minor’s benefit until they are an adult, and sometimes longer if necessary or desired.

4. Not Putting Money into Your Trust

After establishing a trust, many people fail to properly retitle assets into the trust, i.e., fund the trust. Creating a trust but not funding it with assets, as well as having a will with contradictory instructions, may result in unintended and undesirable results.

5. Leaving Your Heirs with a Tax Misery

Most non-spouse beneficiaries are required to fully withdraw a 401k or IRA within ten years of the deceased owner’s death, under the 2020 SECURE Act.  This could result in a significant rise in income taxes for beneficiaries.  Converting some or all of your retirement account assets to a Roth IRA or purchasing a life insurance policy funded by withdrawals from your retirement accounts can lower your heir’s tax liability.

How an Attorney Can Help

A California estate planning lawyer knows the intricacies of estate planning and related tax laws can guide you to make an informed decision and to avoid costly mistakes.

Please do not hesitate to contact the law office of Dennis A. Fordham in Lakeport, California at 707-263-3235 for your estate planning and estate administration needs.