The 5 Biggest Estate Planning Mistakes to Avoid in South Jordan, Utah
One of the biggest mistakes in estate planning is not creating a will and testament in the first place. Without a will, your loved ones could end up in extended and potentially messy probate court proceedings. Neglecting to update beneficiary designations on life insurance policies and retirement accounts can result in unintended heirs, like an ex-spouse. If you don’t plan for minor children or family members with special needs, they could be left without proper care or financial support if you become incapacitated.
To avoid the most common estate planning blunders, it’s essential to consult with an estate planning attorney who can guide you through the basics of estate planning. Here are five major estate planning mistakes to watch out for to keep things simple and secure for your family.
Choosing the Wrong Person To Handle Your Estate
Choosing the wrong person to handle your estate is a common estate planning mistake that can have serious consequences. It’s important to select a reliable individual with the right capability to manage bank accounts, real estate in multiple states, and medical decisions as your personal representative, trustee, or power of attorney to manage your estate planning documents, such as a living trust or last will and testament.
Failure to Minimize Estate Taxes
Utah does not have a gift tax, but the federal gift tax exclusion for 2025 is $19,000 per recipient. This means you can gift up to $19,000 to any one person without triggering the federal gift tax or needing to report it to the IRS. Any excess amount will reduce your lifetime gift and estate tax exemption which is the maximum amount you can pass to your heir’s estate tax-free. The federal estate tax is currently $13.99 million.
For example, if you gift $25,000 to one person, you have exceeded the annual exclusion by $6,000. That extra $6,000 will be deducted from your $13.99 million lifetime exemption. You won’t owe taxes on the gift immediately, but it reduces how much you can pass tax-free through your estate when you die.
Not Naming Contingent Beneficiaries
A contingent beneficiary (or secondary beneficiary) is the person or entity that receives an asset if the primary beneficiary passes away before you.
If you fail to designate contingent beneficiaries, your assets will fall back to your estate and your loved ones will have to go through a lengthy and costly probate process. It is best to name at least two contingent beneficiaries for each asset in your will or trust.
Forgetting to Update Your Estate Plan Regularly
Failing to update your estate plan is a major mistake. Life changes such as divorce, marriage, or the birth of a child can make your current estate plan outdated.
For example, if your living will still names your ex-spouse as your healthcare agent, do you really want them making your medical decisions?
Here are some of the major life events that should trigger an estate plan review.
- Marriage or divorce
- Birth of a child
- Death of a guardian or beneficiary
- Starting a business
- Buying a new home
Creating an estate plan on your own
Incomplete or incorrect estate planning documents can lead to complications after you pass. To avoid this, hire an experienced estate planning attorney who can help you create a comprehensive, error-free plan.
Contact Watts Law Estate planning attorney in South Jordan, Utah
Estate planning mistakes are not only costly, but they can also create unnecessary stress for your loved ones. At Watts Law, I recognize the sensitivity and complexities of estate planning. Contact me , an experienced estate planning attorney, to create a customized plan that meets your specific needs.