Common Estate Planning Mistakes: Protecting Your Legacy in Santa Cruz 

Many people believe that estate preparation should wait until after retirement or when life is less hectic. However, delaying or attempting to manage it on your own can result in major legal and financial issues for your loved ones if you live in Santa Cruz or the Central Coast. A solid estate plan is more than just paperwork; it's a way to safeguard your assets, provide for your family, and ensure your wishes are fulfilled. 

We assist individuals and families in comprehending California estate law at the Law Offices of Emily Buchbinder. Even with the best of intentions, we've seen certain common blunders over the years that can lead to issues. We've outlined these errors here so you can avoid them, take steps to safeguard your legacy, and provide comfort to your family. 

1. Failing to Start the Process at All 

Procrastination is the most common mistake made in creating a will. Many individuals assume they don't need a will because they don't own much property, or that their family will automatically know what to do with their assets. In California, however, if you die without a will or a trust, the state determines how your property is distributed under intestacy laws. Because intestacy laws apply a rigid legal framework, they do not typically align with the desires of the average individual; they often result in passing on your property to relatives with whom you share little relationship, thus leaving close friends and/or partners with nothing after you die. By not creating an estate plan now, you are also leaving yourself open to being taken advantage of because you won't have the necessary documents to allow someone you trust to act on your behalf if you become incapacitated due to an accident or medical condition. Estate planning should include creating documents to protect your interests during your lifetime by designating someone to make medical and financial decisions for you if you can no longer make those decisions. 

2. Using One Size Fits All Online Templates 

Using an online tool to quickly create a will or trust at a low cost is alluring in the digital age. These templates may sound practical, but they often don't account for the specific nuances of California law. Generic forms often fail to account for California's distinct tax laws and probate requirements. Do-it-yourself plans often lead to costly litigation that depletes the estate's value because they use unclear language that is hard for a judge to interpret. Additionally, strategic guidance for complex family dynamics, including mixed families or children with special needs, cannot be obtained through an online form. 

3. Creating a Trust but Failing to Fund It 

An effective way to avoid lengthy, costly California probate is to establish a revocable living trust. Although a revocable living trust allows you to avoid lengthy and costly California probate, this is only true if you are able to fund your living trust. To fund your revocable living trust, you must complete the formalities necessary to title your assets in the name of the revocable living trust. Your assets include your home, bank accounts, and brokerage accounts, among others. Generally, after people sign their revocable living trust documents with the help of an attorney, they forget to change the title on the deed for their Santa Cruz property, or transfer title to their financial accounts into the name of their revocable living trust. Therefore, if any of your assets are still titled in your name at the time of your death, your assets will still be part of your probate estate and subject to the probate process. 

4. Neglecting to Update Beneficiary Designations 

Instead of passing through a will or trust, some assets, such as life insurance policies, 401(k) accounts, and IRAs, pass to heirs through beneficiary designations. Failing to update these designations after significant life events, such as marriage, divorce, or the birth of a child, is a common error. It is crucial to keep in mind that any clauses in your will are usually superseded by a beneficiary designated. Regardless of what your current estate plan specifies, your ex-spouse may lawfully receive the payout if you divorced ten years ago but never withdrew them from your life insurance policy. An essential part of a sound estate strategy is routinely examining this paperwork.

5. Overlooking Incapacity Planning 

Additionally, estate planning safeguards you in the event of incapacity. Many concentrate solely on property distribution, neglecting to plan for circumstances in which they are unable to manage their affairs. Families may have to go through an expensive, unnecessary legal process if they don't have essential paperwork, such as an Advance Healthcare Directive or a Durable Power of Attorney. 

6. Choosing the Wrong Executor or Trustee 

Selecting an estate manager is essential. Without considering their abilities or relationships with other family members, many choose the oldest child or friend. The position requires significant administrative work, and a poor decision could lead to conflicts or delays. For complex family relationships, a professional could be more appropriate. 

7. Ignoring the Impact of California Property Taxes 

Homeowners in Santa Cruz should consider their property taxes before contemplating selling their home. Changes resulting from Proposition 19 have altered inheritance rules and may trigger a tax reassessment unless specific criteria are met. Heirs may be forced to sell their home as a result. Planning ahead of time will help you manage the tax ramifications. 

8. Forgetting About Digital Assets 

Many estate plans ignore digital assets, such as cryptocurrency and online accounts, including social media and cloud-based photos. Without your access or legal right to access the digital assets, your digital legacy could be lost. It is important to make sure that your fiduciary has the authority to manage your digital records for future generations. 

9. Failing to Plan for Special Needs 

If you have someone in your life with a disability that you plan to leave a direct inheritance to, you could be making a huge mistake. A direct lump-sum distribution could prevent that person from qualifying for state and federal benefits, such as Supplemental Security Income (SSI) or Medi-Cal (California’s state Medicaid program). The best way to avoid this situation is to set up a Trust for their special needs. This way, you can distribute your assets to this person to improve their quality of life while keeping them eligible for government assistance. It is important to note that these types of trusts require specific language in their creation to comply with both state and federal laws. 

10. Keeping the Estate Plan a Secret 

Keeping your estate plan secret can lead to confusion and anger among your loved ones. Instead of hiding your estate plan from your family, you should share where your important documents are kept and who your executor or trustee is. Explaining your choices will help minimize misunderstandings and ease the transition to settling your estate once you are no longer living. 

11. Not Updating the Plan Regularly 

Your estate plan should be a dynamic document that reflects changes in your life as they happen. The reality for most people is to view their estate plan as a one-time event. We suggest that you review your estate plan every 3 to 5 years to keep it current with major life events, such as marriage, grandchildren, acquiring new real estate, or changes in the law that affect how taxes are calculated and/or who pays them. An outdated estate plan can have as detrimental an effect as not having an estate plan at all because the outdated estate plan does not represent your current assets or relationships. 

12. Failing to Consider the Needs of Pets 

Most people in Santa Cruz have pets that are also part of their family. However, legally, pets are classified as property. Therefore, if you do not have a plan for your pets, they may end up in a shelter because no one is available to take care of them. You can create a pet trust or simply state in your will how you would like your dog or cat cared for by someone willing to look after it. A pet trust allows you to provide funds for your pet's food, medical care, and any other needs they may have while living with their appointed caregiver or in their appointed location. 

The Value of Professional Legal Guidance 

We at the Law Offices of Emily Buchbinder understand how difficult it can be to think about these problems. Our aim is to make the procedure as simple and clear as possible, while you consider how to avoid these common mistakes. We offer individualized service that takes into account your particular objectives and family circumstances. You can steer clear of these typical blunders and develop a strategy that accurately reflects your principles by collaborating with a knowledgeable lawyer. 
 
Making an estate plan is a present to your loved ones. It offers a clear road map for the future and eliminates uncertainty during a time of loss. We can offer you the professional advice you require in Santa Cruz, whether you are drafting your first will or amending an existing trust.