Posted on: 3 November 2016
Drafting a will is usually the last thing people want to think about, often because the act serves as an uncomfortable reminder of their mortality. As a result, it's not unusual for people to make mistakes when rushing to prepare their wills, errors that could lead to unfortunate consequences for heirs and other family members. Here are two things you want to avoid doing when writing out your final wishes.
Not Taking Advantage of All Tax Advantages
If there is one truth in life, it's that you'll always have to pay taxes, even when you die. When you pass away, all of your cash and possessions will go into an "estate". The value of your estate is assessed at the time of your passing and a tax is imposed by the IRS that must be paid either by the estate itself or your heirs and beneficiaries.
The most common mistake people make when preparing their wills is failing to take advantage of all the tax advantages available to minimize the financial burden their loved ones have to deal with after they are gone. For instance, funeral expenses are tax deductible. However, they're only deductible if your estate pays the cost. Therefore, you need to ensure there is enough money set aside in your estate to take care of these expenses so they can go towards reducing your tax burden. You may also obtain certain tax advantages by putting assets in a trust for your beneficiaries rather than leaving the money or property to them directly.
It's essential you talk to an estate planning attorney, accountant, or conduct the research yourself to ensure you are maximizing available tax advantages to protect loved ones left behind.
Forgetting to Account for Leftover Possessions
Many people focus on the big things they want to leave their loved ones, such as homes, cars, and life insurance policies. As a result, they often forget about small things that may have more sentimental value than financial, such as a unique collection of bobble-head dolls or a cabinet full of DVDs.
If you don't want these items to end up in the trash or want to prevent your loved ones from fighting over them, you need to account for them in the will. Leave specific things to the people who would appreciate them most or order the whole lot be given to charity. Just be sure to take advantage of any tax deductions that go along with your decision.
For assistance with developing a well-thought-out will, contact an estate planning attorney such as Donald B Linsky & Associate Pa.Share