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The 10 Biggest Mistakes in Estate Planning


The 10 Biggest Mistakes in Estate Planning

1. Letting Jerry Brown write your estate plan.

Was your will written in the State House? If you don’t have a personal estate plan, don’t worry, Jerry Brown has written a plan for you. Jerry Brown’s plan is the most expensive estate plan because you’re facing a potential probate, conservatorship, guardianship, and death taxes of 40%.

Why would you want to leave it up to the State of California to dictate where your property would go? Why would you allow the state to dictate who would raise your children?

Don’t be a procrastinator. Don’t let Jerry Brown plan your estate.

2. Leaving your estate unprotected and free of trust to your children.

Leaving your estate unprotected. How are you leaving your assets to your children? If you’re like most people, your estate plan passes those assets “outright and free of trust” to your children at some age, perhaps 30, 35, and 40. If you’re leaving your assets “unprotected” to your children, then those assets could be lost by the children in a divorce, car accident, bankruptcy or lawsuit.

I have been an attorney for 45 years and I can show you how you can protect your money from creditors and predators. How would you feel if your children never enjoy their inheritance because of creditors and predators? You need to leave your assets to your children in an ongoing trust to protect your assets from lawsuits.

Imagine a flatbed truck with all of your assets packed into it and as this truck goes down the hill assets fly off the road that were meant for your children and grandchildren.

How are you transferring your assets to your children? In a flatbed truck or in an armored car? If you want your assets protected as they pass down that road to your children and grandchildren, then you need to place your assets in an armored car, that is an ongoing trust. Call me and let me protect your children’s inheritance.

3. You don’t have a current health care proxy in your wallet.

Not having a current health care proxy in your wallet. Do you want to become the next Terry Schiavo? She was pronounced dead at 28 but the doctors kept her alive for another 4 years before turning off life support. Terry Schiavo did not have a health care proxy or a HIPAA waiver.

The American Medical Association tells us 78% of the patients in the emergency room in hospitals today do not have a health care proxy with them and do not have a current HIPAA document to allow their agents to talk to their doctors. Where is your health care directive?

4. You don’t have a living trust, you have a 'living nightmare' with outdated documents.

Do you have a living trust or a living nightmare? Outdated documents can be worse than no estate plan at all. You need to update your plan at least every three years to make sure that it’s fully funded and you have the right people acting for you.

Outdated documents can put your estate in serious jeopardy.

For example, my 90-year-old client that did not want to update his plan because he said it was a perfect plan that I had done for him 35 years ago. Unfortunately, after he died, we discovered that it was not fully funded and his estate had to go through probate even though he had a trust.

5. You don’t have 'beneficiary designation forms' for your IRAs.

Where are your beneficiary designation forms? Many families are passing big parts of their inheritance in the form of IRAs or 401(k)s but some families are getting into messes because of missing beneficiary designation forms.

Retirement accounts like IRAs and 401(k)s require the owners to fill out specific form naming the beneficiaries.

Beneficiary designation forms are not part of your will. Beneficiary designation forms are a separate document from your will. Your IRAs will not pass according to your will, but according to your beneficiary designation form. You need to get organized and disaster-proof your IRAs. Name a primary beneficiary and a secondary beneficiary for the IRAs you own. You need to get current copies of those forms to show who you want to have as your beneficiaries.

6. You are holding title to your appreciating property in joint tenancy forcing your spouse to pay income taxes.

Holding appreciating property in joint tenancy rather than community property and not benefiting from the double step-up basis and cost.

Married clients should hold title to appreciating assets as community property and not joint tenancy. Joint tenancy is an income tax disaster.

For example, if you bought a stock for $50,000 a long time ago and the value today is $250,000. If you sold it today the difference between your cost of $50,000 and the fair market value today would be $200,000 which would be subject to long-term capital gains tax.

However, if you held that stock until one of you dies, and it is held in a joint tenancy, only $100,000 would be subject to long-term capital gains tax because there’s a step-up value basis in decedent’s half.

However, if you held your stock as community property after one of you dies, there would be no tax due because there is a double step-up value basis.

Community property is the best way to hold title to appreciating assets in California.

7. You aren’t hiring experts to advise you.

Not hiring experts to advise you. Today there are 15,000 attorneys in Orange County and all of them claim to be estate planning experts. However, less than .5% of these 15,000 attorneys have been certified by the State Bar of California as estate planning experts and passed a second bar exam.

Today, attorneys are just like doctors and specialize in various parts of law. If you have chest pains, would you go to a walk-in clinic or a cardiologist? Likewise, if you want to properly plan your estate would you go to a certified estate tax planning attorney or go to a general practice attorney?

I have over 45 years of experience and I have created over 7,000 estate plans. I have the expertise you need. Call my office today so I can help you plan your estate.

8. Your old A-B estate plan will force your children to pay unnecessary income taxes.

Not having the right tax provisions in your estate plan. Most people created an A-B trust when the death tax exemption was only $600,000 because they wanted to double their death tax exemption to $1.2 million to save taxes. Today, the exemption amount is $5,490,000.

Most families no longer have to worry about the death tax and therefore, you might want to restate your old AB trust to a simple trust to make it easier for the surviving spouse. You no longer need the old complex AB trust. Many of my clients are restating their complex trust to a simple trust to make it easier for the surviving spouse.

9. Failing to do Medi-Cal planning because you assume your trust will cover everything.

“I don’t have to worry about Medi-Cal planning because I have a living trust.” Statistically, 50% of us will end up someday in a nursing home. Nursing homes are expensive. They can cost $100,000 or more per year in California.

Long-term care insurance is an option for some people but too expensive for others because we don’t use the nursing care benefits you and your family lose the premiums you deposited into that policy. Medi-Cal asset protection trusts can protect you from these costs. Medi-Cal asset protection trust can be used to protect your home, stocks, and other assets for the benefit of your children.

10. You are 'scrimping' on your estate plan by hiring inexpensive and inexperienced advisors.

Trying to “scrimp” on your estate plan. You get what you pay for in this life. If you hire inexperienced advisors you will probably end up with some problems later on when you die. The two things you never want to scrimp on: one is your parachute and the other is your estate plan. The reason being is you only need to use your parachute and your estate plan once and they better work when you use them.


I fix trusts; don’t make these mistakes. To learn more, call us at 949-756-0684 for a free consultation in either our Irvine or Long Beach office.

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