Some Common Tax Mistakes to Avoid When Creating an Estate Plan

Estate Plan Awareness Week: The Importance of an Estate Plan

Creating an estate plan is one of the essential things to safeguard your assets and relationships. While it’s important to have a legally valid estate plan and will, there is no denying the fact that it’s a tedious process. Any mistake in your estate plan can render your will invalid. When making an estate will, one should not take any chance and keep room for errors. You might be tempted to creating an estate plan on your own. However, doing so will only add to your problems. Thus, it’s recommended to hire a qualified estate planning law firm Virginia Beach.

In this blog, we have listed down some pitfalls to avoid when drafting an estate plan and will.

1. Not creating an estate plan at all

Although people are aware of the problems they can face if they don’t have a valid will and estate plan, most U.S population choose not to have one. Most people think that estate planning is for wealthy people who have a large sum of money and assets. However, it’s far from the truth. No matter how small or large your estate is, you must have an estate plan. Having an estate plan allows you to control your wealth and assets even when you become incapacitated or die. Not having an estate plan will attract the probate process, which can be an excruciating experience for your surviving members. An estate plan ensures your assets and funds are managed and taken care of according to your wishes even when you have passed. Moreover, it safeguards the interests of your loved ones after your death.

2. Not considering asset ownership

Estate planning is a deliberate process that involves keeping inventory of your assets. Another major part of estate planning is determining who will get what assets and how. Most people commit the mistake of miss counting their estate and allocating the assets. The asset ownership also affects how the assets will be distributed. If you are the sole owner of the property, your spouse will not get the owner in case you turn incapacitated or pass away. Thus, hiring an estate planning attorney Virginia Beach is essential when creating a will.

3. Not considering tax implications

Tax is something everyone must consider when drafting an estate plan. Although Virginia doesn’t charge estate tax, one is subjected to federal estate tax. While creating your estate plan, you must make yourself aware of state and federal tax exemptions. Not considering the taxes can prevent your legal heirs from getting the benefits you intended for them.

4. Assuming there’s only one way to plan your estate

Estate planning and will don’t work for everyone the same way. Understanding how estate planning works and how to make the most out of it is the best step in committing irrevocable mistakes. Before drafting an estate plan, understanding your family dynamics and needs is essential.

5. Not updating your plan periodically

Drafting an estate plan is an accomplishment in itself. However, writing an estate plan and not reviewing it can be the worst mistake. Failing to update the estate plan can make it obsolete by the time you pass away. Moreover, certain life events like marriage, divorce, children, or profit are times when you should revisit your estate plan.