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Estate Planning Mistakes

Mar 01, 2015 02:11PM ● By Elena Hutslar

By Daniel DuRee

            The road to estate planning hell is often paved with the best of intentions. While assisting clients in the probate process or with a trust administration, I often encounter small missteps that result in a large headache for the surviving family. Below are the most common estate planning mistakes I run across and how to avoid them.

1. Assets Left Outside of a Trust

            Even if you have a revocable living trust, if an asset is not in the trust it must go through probate if it is worth more than $150,000. Often this happens when people create a trust online or through a low cost company and they are not sufficiently reminded that assets must be titled in the name of the trust to avoid probate. It is not a bad idea to check in with your estate-planning attorney every few years, as they will always ask if all of your assets are in the name of the trust.

2. Beneficiary Designations that Conflict with a Trust

            A beneficiary listed on an account trumps any disposition under a trust or a will. If there is a valid beneficiary on an account that account transfers to the beneficiary regardless of what a trust says.

3. Married Couple Holding Title to Real Estate as Joint -Tenants

            Contrary to popular belief (and what most title companies tell people), a married couple in California should never hold title to real estate as joint tenants. Yet roughly sixty percent of my new clients hold their property this way. If real estate is held as community property or in a trust, the tax basis for capital gains purposes steps all the way up to the current value at the death of the first spouse. This does not occur for joint-tenants. Holding title as joint-tenants can result in a serious capital gains tax bill if a surviving spouse ever sells a property. 

4. More than $150,000 in Assets and No Living Trust

            Even with a will, if an individual in California dies with more than $150,000 in gross assets, their estate must still go through the court supervised probate process. While a will is sufficient in many states, in California most people need a revocable living trust for proper estate planning.

5. 401(k) or IRA Beneficiary Designations Are Outdated

            As I noted earlier, a beneficiary designation supersedes anything in either a will or a trust. Often people amend their trust but neglect to change their beneficiary designations. It may be advisable to name a trust as a secondary beneficiary to a retirement account so that any distribution changes made to the trust will channel retirement funds according to that scheme. 

            By being aware of potential pitfalls and seeking out the help of knowledgeable professionals, you can avoid the calamity described above and have the peace of mind that your family will be taken care of should anything happen to you. As always, consult with an expert before making any estate planning decisions, and don't hesitate to call my office if you have any questions.

Daniel L. DuRee is a third generation resident of Contra Costa County and a licensed attorney practicing in Walnut Creek. He can be reached at (925) 210-1400 or visit