Effective estate planning is essential if you want to preserve your wealth for your children. Beware of making these common estate planning mistakes if you want to avoid paying unnecessary extra estate taxes (death taxes) to the IRS and state taxing authorities thus reducing your children's inheritance. You will be pleased to know that these costly mistakes are easily avoided with proper planning.
Failure to recognize the significance of the State estate tax law.
Many states have their own estate tax (death tax) and the overwhelming majority of those have "decoupled" their estate tax from the Federal estate tax, which means that your estate could be subject to state estate tax even if no Federal estate tax is due. You can also consult a farmington ut estate planning lawyer, if you want to solve your legal issue.
Since the Federal estate tax exemption currently is $5.12 million (for 2012 only) and the state thresholds for states that impose their own estate tax all are under this amount (most commonly, at $1 million), without proper planning, this discrepancy could result in an unpleasant surprise for your heirs upon your death. You need to review your current financial situation to determine the potential exposure to state estate tax and learn how to minimize it.
Leaving everything to your spouse.
Many couples own the bulk of their property jointly and have reciprocal Wills in which the wife leaves everything to the husband and the husband leaves everything to the wife. This is generally an inefficient tax arrangement for couples, whose combined estates may exceed the typical $1million state death tax exemption because it wastes the available exemption of the first spouse to die, leaving only the $1 million exemption of the survivor to avoid death tax.