TOP TEN COMMON ESTATE PLANNING MISTAKES

A will or trust can not only fail to carry out the decedent’s intent, it can actually frustrate the intended estate distribution, and cost the decedent’s loved ones significant time and money, not to mention anguish.

Particularly in an era of online-assisted do-it-yourself legal work, poorly made self-made and cookie cutter wills and trusts abound.

WHAT IS ESTATE PLANNING? (PART III – OTHER ESTATE PLANNING TOOLS)

As noted, wills and trusts are the most common estate planning tools, but are far from the only tools.  Depending on family dynamics, estate size and composition, a client may also want to engage the following.

FAMILY LIMITED PARTNERSHIPS AND LLC’S

For families that own significant assets such as rental property or operate small businesses can benefit from the use of entities such as family limited partnerships (FLPs) or family limited liability corporations (LLCs).  These entities provide several benefits for parents and subsequent generations.

WHAT EXACTLY IS ESTATE PLANNING? (PART II – WILLS AND TRUSTS)

WILLS

A Will is a document that sets forth how you want your property distributed upon your death.  It can be extremely specific (e.g., “I hereby give, devise and bequeath my personal residence and all personal property to my son Jerome, with the exceptions that all of my fine china shall go to my niece Jenny, and my yellow couch to my best friend Fifi.

WHAT EXACTLY IS ESTATE PLANNING? (PART I)

What exactly is estate planning, and who needs it?  Estate planning is primarily the process of determining how, when, and to whom you want your property to pass upon your death.  It also addresses how you want your estate to be handled when and if you lose the ability to manage it yourself (often referred to as “disability planning,” a subset of estate planning).

Good estate planning will, among other things: provide management and protection of family assets; control the management of your property and your personal financial needs when you are unable to manage your estate yourself; eliminate uncertainty regarding inheritance; ensure the continued financial health of your loved ones after you are gone; provide creditor protection to your heirs; simplify administration of your estate; avoid the high cost and time of probate; minimize applicable estate and/or inheritance taxes; define and accomplish your charitable wishes; minimize income taxes payable by your estate (which necessarily reduce the property passed on to your heirs), and; provide post-mortem control over your assets.

Non-trust and Non-probate Transfers (part III)

DESIGNATED BENEFICIARIES

As with joint tenancies and community property with right of survivorship, property which passes to individual(s) as a result of a designated beneficiary provision (life insurance and retirement assets, generally) is outright, and therefore free of any management by the decedent, and is subject to the beneficiary’s creditors.

Probate Litigation

Probate litigation is sometimes necessary to protect the rights of beneficiaries or heirs, potentially due to an unclear or poorly drafted will or due to a dispute among family members. Probate law in California can be complicated and these matters may easily become hotly contested due to emotionally charged issues and legal complexities.

Valid Wills and Revocation

What constitutes a valid will? Can great Aunt Sally create a valid will by writing “I leave all of my earthly possessions to my cockatiel Cornelius. – Sally” in lipstick, on her vanity mirror? Does it need to be witnessed or notarized? 

A testator (the person making the will) generally must be 18 years old to make a valid will in California, unless they’re an emancipated minor.