Death is never a pleasant discussion subject, but it is an important one to think about when you have a family. Leaving behind your assets so that your family will be able to maintain in your absence is important. Recognize that there is a wrong way to go about the process. Mistakes in estate planning can end up leaving more of a burden for your family than a benefit. Know what mistakes to avoid.
Overlooking Estate Taxes
In 2017, the limit for the estate tax exemption was increased to $5.49 million for each person. This basically means that you can leave your family up to this amount of money tax-free, any assets over this amount will lead to them being taxed on your estate.
If you're looking to leave behind a trust, several properties, jewelry, collectibles and other high valuables, don't simply assume you won't hit this mark. Things can get especially sketchy with properties because they are not valued at the price you paid, but instead the value at the time of the transfer. Always sit down and reassess your estate value and consider a structured estate plan to help minimize or avoid a tax burden.
Putting Their Name On The Tittle
Transferring your assets in the simplest way possible seems like the goal. With this in mind, in terms of transferring a home, it can't get any simpler than putting your child's name on the title, right? The answer is no. The problem with this is that in the same year that you add your child's name to the title, you will also have to file a gift tax return and pay taxes provided the property is valued at more than $14,000.
For most properties, the value is going to far exceed this amount. Another problem is that in the meantime, as long as the child's name is on the home, should they go through a divorce, bankruptcy or even a lawsuit, your home will be a jeopardy because they are also a legally registered owner.
These represent just some of the seemingly minor, but costly, mistakes you could make that can impact your family. If you want to ensure your family is protected, sitting down with an estate planning lawyer like those at Seiler & Parker PC is a good idea. These professionals will go over your assets, your goals and your family's needs to determine the right course of action.
Make certain you are taking steps to protect your family now, as well as into the future.