Estate planning is widely considered one of the most important legal processes an individual can go through during their lifetime. Estate plans ensure that a person’s assets are appropriately allocated to their list of beneficiaries in the event of their death or incapacity. However, each year, thousands of beneficiaries lose assets due to oversights and improper estate planning. For the past 25 years, boutique law firm Catanese & Wells has garnered a reputation within their local community for their leading Los Angeles estate attorneys and client-focused services. Below are a few examples of the many estate planning mistakes Catanese & Wells help their clients to prevent.
Making Children Joint Owners of Assets
When it comes to building a bulletproof estate plan, it is important to review the document from every angle. This is often where legal professionals come in handy, as it can be difficult for estate owners not only to review their estate plan but create an impartial one. A mistake that attorneys see time and time again is naming children as joint owners of assets. While there may be good intentions behind this concept, this also means that creditors will have access to assets. Instead, naming a child a power of attorney and payable-on-death beneficiary will allow them to access accounts without combing assets with the child’s estate and away from potential creditors.
Not Updating Plans Over Time
Estate planning is never easy and can take many hours of drafting and research before finalizing with an attorney. It is therefore understandable why so few people take the time to update this document throughout their life. While this practice is understandable, it is also a preventable mistake that can lead to loss of assets for beneficiaries. After any major life event, the birth of a child, marriage, divorce, or death of a family member or beneficiary, it is recommended that individuals re-evaluate their estate plans and update important information such as beneficiaries and the allocation of assets.
Not Preparing for Estate Taxes
Although an estate plan’s primary purpose is to leave assets to beneficiaries, estate tax liability can actually negatively impact a beneficiary’s finances. While estates are not taxed at the federal level unless the estate exceeds 11.58 million per person or $22.36 million per couple, some states do have an estate tax for estates. Today, eleven states only have an estate tax: Hawaii, Maine, Connecticut, Illinois, Massachusetts, Minnesota, New York, Maine, Oregon, Vermont, Rhode Island, as well as Washington, D.C.