10 Myths About Estate Planning Myths That Can Cost Your Family (Part 2 of 2)

9:46 pm Estate Planning

truth e1385502452921 10 Myths About Estate Planning Myths That Can Cost Your Family (Part 2 of 2)When it comes to protecting your family, we know you want to do the right things.  But sometimes preconceived notions of what is true and false can get in the way when it comes to estate planning.  We’d like to dispel 10 common estate planning myths that, if you believe them to be true, could prove to be disastrous for your family.  Here are the second 5 of 10:

You don’t need a lawyer to create an estate plan.  A Consumer Reports investigation recently found that online resources to draft wills and other estate planning documents usually don’t work well for most people.  This is because everyone’s situation is different, and most online services don’t take this into account.  To create an effective California estate plan, you should consult with an Irvine estate planning attorney.

You have to use a trust to avoid probate.  While trusts are a great way to avoid the time and expense of probate and keep your financial information private, there are other ways to avoid probate.  For retirement accounts, annuities, life insurance and bank accounts, you can avoid probate by listing beneficiaries for each account.  California allows you to add a payable-on-death designation to bank accounts and CDs and a transfer-on-death registration for securities.  California does not allow for transfer-on-death deeds for real estate, but property held in joint tenancy (or tenancy by the entirety for married couples) passes automatically to the surviving owner without probate in California.

Trusts avoid estate tax.  Certain trusts can be used to reduce or even eliminate estate tax liability, but all trusts in and of themselves do not automatically provide protection against estate taxes.

My estate is too small to worry about the estate tax.  That may be true today, when the estate tax exemption is $5.25 million for individuals and $10.5 for married couples.  But state and federal laws change all the time, so you need to protect your assets.

Gift taxes are due on gifts to anyone over $14,000.  Gifts to anyone over $14,000 simply reduce your lifetime gift and estate tax exclusion amount.  You will only owe gift taxes once you exceed the entire exclusion amount.  You still have to file a gift tax return so the IRS (and you) can keep track.

For more information on creating an estate plan for your family, contact our Orange County law firm.

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