Common Estate Planning Mistakes
Parents owning real property in common with their children to avoid estate planning. If you intend for your children to own your real property when you pass, your children should inherit your property through a will or trust and NOT own it in common with you while you are alive. State law enables your children to receive a “step up basis” on the property value if they inherit property at your death. For example, if you purchased your home in 1950 for a value of $15,000 and today the fair market value is $500,000, if your children inherit this property at your death, they realize ZERO capital gains. If you own your property in common with your children, they WILL realize capital gains depending upon the appreciation value of the real property and how title was held.
Parents of minor children need an estate plan. Parents with minor children need an estate plan to ensure guardians have been selected to care for minor children if mom and/or dad die suddenly. An estate plan is also needed to avoid probate to ensure your children do not inherit everything outright at the young age of 18.
Blended families always need an estate plan to avoid unintentional disinheritance of stepchildren. At a minimum, you and your spouse should have a will to ensure stepchildren are acknowledged to avoid disinheritance. Your surviving spouse can always revoke a will upon your death, so a trust is preferable for maximum protection.
People who have $100,000 or more of assets need an estate plan. If the net value of your estate is $100,000 or more and if you do not have a trust, your assets will go through probate. Your loved ones could lose substantial monies in court costs and attorney fees. These costs could have been avoided if the property was titled in the name of a trust.
People who own real estate in California need an estate plan. If you own real estate in California and if you do not have your real estate titled in a trust (or a corporation assigning your corporate interest to your trust), your assets will go through probate. These costs could have been avoided if the property was titled in the name of a trust.
People who have a trust but failed to title their assets into the name of the trust. Your trust is only as valuable as the assets titled in the name of the trust. To avoid probate and save time and money by avoiding probate, you must title all of your assets into the name of your trust. Ensure you update your beneficiary designations on your life insurance, annuities and/or tax deferred accounts. It is prudent to check title on all of your assets to ensure they are titled in your name as trustee of your trust.