1. Not executing a Will. If you don’t make a Wall, Kentucky will do it for you. Your assets may not go where you want and, if your estate is big, unnecessary taxes may be paid.
2. Wanting just a “simple Will.” Some people leave their spouse everything regardless of the estate’s size because the spouse pays no estate taxes. For estates over the estate tax exemption ($5,000,000 for persons dying in 2011 or 2012), that could cost your heirs.
3. Putting everything into joint tenancy. While that avoids probate, joint ownership between spouses has the same danger as a simple Will. If you own property jointly with others, like children, “your” property may become subject to the claims of the child’s creditors and you may get taxed on your own property if the child dies before you.
4. Thinking that avoiding probate will avoid taxes. It doesn’t always. There are advantages to avoiding probate, but saving taxes isn’t generally one of them.
5. Leaving property to one child to “work things out.” If you leave your assets to one child, they are not obligated to give it to other members of your family. It may even cost them in gift taxes to redistribute your assets as you would have wanted.
6. Letting your children “take care of” your grandchildren. In larger estates, it may cost less for you to leave property to grandchildren directly rather than letting your children do it through their own estates.
7. Failing to consider how your affairs will be handled if you become incapacitated as the result of a stroke, accident or illness. If you don’t plan, a costly guardianship may be required to give someone authority handle your personal and financial affairs.
8. Not using trusts to help beneficiaries handle their inherited wealth. You can ease beneficiaries into the management of inherited wealth with the use of testamentary trusts.
9. Not planning for taxes that may be due at your death. Children may be forced to sell important family assets at reduced prices if you do not have a proper plan in place.
10. Procrastination. The government will love you for this.
The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.