One of the key benefits of an estate plan is that it allows you to dictate how assets such as a California home are allocated after your death. However, it may also provide you with an opportunity to make gifts during your lifetime or ensure that your children are cared for in the event that you die or become incapacitated. Of course, these benefits can only be realized if your plan is structured in accordance with applicable state and federal laws.
Not having a plan may be the biggest mistake of all
Perhaps the biggest estate planning error is not having a will, trust or other documents in place at all. Ideally, you will start building your plan the moment you become a legal adult. If you have created a plan, make sure to review it at least once a year to ensure that it still meets your needs.
Have you checked your beneficiary designations recently?
You can typically attach a beneficiary designation to a retirement account, bank account and life insurance policies. Doing so may help to keep them out of your estate, which means that they avoid probate. However, this may not be the case if you forget to add a beneficiary to a given asset or list a beneficiary who is not legally capable of inheriting property.
Don’t forget about taxes
Transferring assets to beneficiaries may trigger a taxable event either for the estate or for the person obtaining your property. In some cases, both state and federal taxes may be levied on your estate depending on its total value at the time of your death.
Having a comprehensive estate plan may make it easier to transfer property or accomplish other goals after you die. It may also help to ensure that your children, spouse or other dependents are adequately cared for if you are unable to provide for them. Ideally, you will talk to your loved ones frequently so that they understand what you want or need your plan to accomplish.