Estate planning goes beyond simply drafting a will. It is about ensuring your life’s work continues to benefit your loved ones exactly as you intend. However, even the most well-meaning plans can sometimes fall short.
Without a clear plan in place, your family may be left to navigate a tangled web of legal and financial issues, all while grieving your loss. By understanding the pitfalls that can arise in estate planning, you can take steps to avoid them and create a legacy that truly reflects your values and priorities.
Pitfall #1: Using shared bank accounts
Adding an adult child as a joint owner on your bank accounts can simplify account access and bill paying during your lifetime. However, this arrangement can lead to unintended consequences after your passing.
In California, as in many states across the country, the account becomes the sole property of the joint owner, regardless of what the will says. This can lead to disputes among siblings or other beneficiaries. To avoid this, consider creating a revocable living trust or adding all children to the account with a clear understanding of your intentions.
Pitfall #2: Leaving assets to multiple generations
Leaving assets to your minor grandchildren or great-grandchildren can lead to legal questions and delays. In California, the courts may need to step in to determine whether the law allows for minors to receive percentages of an estate. This can lead to significant delays and added expenses. Consider leaving specific amounts of money to minor children or limiting bequests to adult children and grandchildren.
Pitfall #3: Neglecting clear home succession plans
The family home is often a significant asset and unclear succession plans can lead to disagreements over property maintenance and control. Some might want to keep it in the family, while others prefer to sell it.
It is vital to have open and honest conversations with your family about your wishes for the family home. Be sure to put your intentions into writing, incorporating them into your estate plan. This might involve setting up a trust to manage the property or providing specific guidelines for its sale and the distribution of proceeds.
Empower your decisions
If you have worked hard to build a good life for your family, you have likely thought about what will happen to it all when you are gone. This concern is at the heart of estate planning. By addressing these often-overlooked aspects of estate planning, you can better safeguard your hard-won legacy and secure a brighter future for your loved ones.
