Several weeks ago on this blog, we delved some of the most common pitfalls in estate planning. Of course, estate planning is a broad subject, so we only touched on a few of the most prevalent errors people make in the process. This week, we will pick up where we left off and give you some more tips for sidestepping mistakes as you begin planning.
- It almost seems too obvious to say, but by far the most common pitfall is neglecting to draft an estate plan in the first place. Many have a misconception that it's just for the elderly or that it's something to put off for a rainy day. That couldn't be further from the truth. Everyone should have an estate plan.
- Many fail to use gifts as a way to reduce the taxes on the estate. By doing so, you're leaving a potential $26,000 in tax savings on the table.
- Others don't take advantage of the spouse exemption. That can protect up to $675,000 in taxes.
- Leaving a life insurance policy is a good idea, but some people aren't aware that life insurance policies can leave your loved ones with a massive tax bill. Instead, an attorney can help you design a life insurance trust that can save your family a world of grief.
- Making a bad choice for the executor. By default, many choose a child or spouse to handle things, but that's not always the best route.
Finally, many people think they can take care of estate planning issues on their own. However, these matters can become incredibly complex and it's highly advisable to speak with a legal professional who knows the ins and outs of the process.