When residents of California like you start looking into creating an estate plan for the first time, it can be an overwhelming experience.
With so many rules and laws governing the process and everyone having their own suggestions, picking the facts out of the fiction and deciding on what works for you personally can be a difficult task.
Possible challenges to anticipate
There are many challenges that come along with creating an estate plan. Even gearing up to create the estate plan can lead to many challenges:
- Determining who your beneficiaries will be
- Designating any guardians if necessary
- Leaving a letter of intent
- Dealing with matters involving durable power of attorney
If you are like many people, the first challenge is just becoming familiar with all of these terms.
You will also need to learn the state laws that apply. Estate planning can be tricky because what applies in one state may not necessarily apply to another. If you move in the middle of creating an estate plan or after you already have one, you may need to change or update it.
Common mistakes to avoid
When you are working on your estate plan, there are plenty of pitfalls you may end up stumbling into and incorrect myths that you may take to be factual. For example, some have the misconception that estate planning is equivalent to asset protection. However, treating your estate plan in such a way is a mistake. Family trusts are not a way to protect assets from either business risks or lawsuits, as these trusts are “transparent” and thus their assets are subject to the same risks they would have been before establishing the trust.
Another mistake to avoid is thinking that a trust will reduce the cost of dying. Avoiding probate through creating a living trust can help you out in a lot of ways, but you should not immediately assume that you will be saving money from it.