10 Common estate planning mistakes in California and how to avoid them
Estate planning in California comes with its own set of unique considerations. Understanding these nuances is crucial to ensuring that your assets are distributed according to your wishes, and that your loved ones are protected from unnecessary legal challenges. Here’s a look at the most common estate planning mistakes in California and how to avoid them.
1. Failing to Create a California-Compliant Will
In California, if you die without a will (intestate), your estate will be distributed according to state intestacy laws, which may not align with your wishes. California’s probate process can be lengthy and expensive, making a will essential.
How to Avoid: Draft a California-compliant will with the help of an estate planning attorney. Ensure it meets all legal requirements, including proper witnessing and signatures.
2. Not Updating Your Estate Plan After Life Changes
California law recognizes community property, which can impact how your assets are distributed. Major life changes like marriage, divorce, or the birth of a child can have significant effects on your estate plan, particularly regarding community property.
How to Avoid: Regularly review and update your estate plan, especially after significant life events. Ensure that community property is properly addressed.
3. Ignoring California’s Unique Community Property Laws
California is a community property state, meaning that assets acquired during marriage are generally considered jointly owned by both spouses. This can complicate your estate plan if not properly addressed.
How to Avoid: Work with an attorney who understands California’s community property laws to ensure your estate plan reflects your wishes regarding jointly owned assets.
4. Overlooking the California Probate Process
Probate in California can be costly and time-consuming, especially for large estates. Failing to plan for probate can result in delays and additional expenses for your heirs.
How to Avoid: Consider establishing a living trust to bypass the probate process. Trusts allow your assets to be transferred directly to your beneficiaries without the need for court involvement.
5. Not Planning for California Estate Taxes and Other Costs
While California doesn’t have its own estate tax, federal estate taxes may still apply. Additionally, California’s probate fees are calculated based on the gross value of the estate, which can add up quickly.
How to Avoid: Work with a financial advisor to explore tax-saving strategies and consider setting up a trust to reduce probate fees and ensure a smooth transfer of assets.
6. Failing to Plan for Incapacity
California law allows you to designate someone to make medical and financial decisions on your behalf if you become incapacitated. Without the proper documents, your family may face challenges in managing your affairs.
How to Avoid: Include a durable power of attorney, advance healthcare directive, and living will in your estate plan to ensure your wishes are respected if you’re unable to make decisions yourself.
7. Leaving Assets Directly to Minors Without a California Custodianship
In California, minors cannot directly inherit assets. If you leave assets directly to a minor, the court will appoint a custodian to manage the assets until the minor reaches the age of majority, which can be a cumbersome process.
How to Avoid: Set up a trust for any minor beneficiaries, allowing you to designate how and when they will receive their inheritance, and ensuring the funds are managed according to your wishes.
8. Not Including Digital Assets in Your Estate Plan
With the rise of technology, digital assets such as social media accounts, cryptocurrency, and online business interests are becoming increasingly important. California has specific laws regarding the management of digital assets after death.
How to Avoid: List your digital assets and provide instructions on how they should be managed or transferred. Include this in your estate plan and ensure your executor or trustee has the necessary access.
9. Choosing the Wrong Executor or Trustee
In California, the executor or trustee you choose will be responsible for managing your estate, paying debts, and distributing assets. Choosing someone who isn’t up to the task can lead to delays, legal challenges, and added stress for your loved ones.
How to Avoid: Choose a responsible, trustworthy individual or a professional fiduciary to act as your executor or trustee. Consider naming an alternate in case your first choice is unable to serve.
10. DIY Estate Planning in a Complex State Like California
While it might seem like a cost-effective solution, DIY estate planning can lead to significant legal issues in a complex state like California. The state’s unique community property laws, probate process, and tax considerations require careful planning.
How to Avoid: Consult with an experienced California estate planning attorney to ensure that your plan is comprehensive, legally sound, and tailored to the state’s specific laws. Contact an attorney at Kabiri Law today.
Conclusion
Estate planning in California requires careful consideration of the state’s unique laws and processes. By avoiding these common mistakes, you can create a robust estate plan that protects your assets and ensures your wishes are honored. If you need assistance with your estate planning, contact an estate planning attorney at Kabiri Law who can provide guidance and help you navigate the complexities of the state’s legal landscape.