Estate Planning Mistakes to Avoid in California

During planning meetings with new and existing clients, simple questions often lead to in-depth conversations. Sometimes, clients have remarried recently, bought a home, or experienced rapid business growth — changes that are not yet reflected in their estate plan. In other cases, clients assume a simple will is sufficient or that they have time to “figure out the details later.”

Estate planning, especially in California, involves unique intricacies that, if not planned for in advance, can create significant gaps and costly mistakes. Here are the common ones we see, along with strategies to help avoid them.

Mistake #1: Putting Off Your Estate Plan

Estate plans include critical documents and legal steps that outline how to distribute your assets, establish medical directives, create trusts, grant medical and financial powers of attorney, appoint guardians for young children, and more. Without one, your estate will pass through California’s inheritance laws, which may not honor your wishes. Consider these situations if you don’t have an estate plan upon your death:

• Lengthy Probate Process: California has a lengthy, public probate process, which can delay when your heirs receive assets and cast undue scrutiny on your heirs and estate. It’s also expensive, with fees based on your gross asset value rather than the net.¹
• Distribution of Assets: Without a clear estate plan, you’re considered intestate and your assets will be distributed according to California law, and not necessarily your intentions. This becomes more critical in California, with its community and separate property laws and blended families, in which certain members may receive more or less than you intended or affect the taxation of heirs.
• Health Issues and Incapacitation: If you fail to outline powers of attorney and medical directives, you will lose control over how you’re treated if you’re medically incapacitated. This can cause additional stress on your family, forcing them to interpret your wishes during an already difficult time.

There are additional consequences if you wait too long to draft your estate plan, including:

• Missed Planning Opportunities: You may not have enough time to implement certain tax-efficient strategies, such as gifting, moving appreciated assets out of your estate, and more.
• Higher Risk of Medical Incapacitation: An illness or injury can significantly limit your options and your ability to plan altogether.

Mistake #2: Overlooking Key Steps or Decisions

If you have an estate plan, it’s important to work with an estate attorney and your wealth advisor to ensure you’re making appropriate financial and technical decisions that could affect your assets. For example, we often see overlooked actions, such as:

• Incorrect Asset Titling: The way your assets are titled (e.g., community, separate, joint, etc.) can have benefits or consequences.
  • In California, spouses have community rights, so without proper asset titling, children from a previous marriage, for example, may be unintentionally disinherited.
  • A home designated as community property gives a spouse a double step-up in basis, virtually eliminating capital gains taxes. However, if it’s titled as joint tenancy, the step-up is only half the value.
  • If your asset titling doesn’t match your trust (e.g., your house is titled outside of a trust), it can trigger probate or distributions that don’t match your intentions.
• Not Understanding Prop 19: Proposition 19 gives children heirs the benefit of a low property tax rate but only under certain conditions, which if not fulfilled can create significant tax implications. It’s important to understand the caveats, including:
  • The home must have been your primary residence and the heir must live in the house as their primary residence within a year of inheriting it.² Without proper planning, property taxes can surge to the current market value, forcing your children to pay high taxes or sell the property because they can’t afford it.
  • There are property tax exclusion limits to consider, stating the home’s market value cannot exceed its tax value plus $1 million.² If it does, your heirs may be subject to reassessment and higher property taxes.
• Adding Kids to Property Deed Before Death: Many people think adding their kids to their deed while they’re still living can help simplify probate but fail to understand the gift versus inheritance distinction. When adding a child to your deed, it’s essentially a lifetime gift, which eliminates the step-up in basis they would have received upon your death — something that helps reduce or eliminate capital gains. They would also lose the benefit of a low property tax base under Prop 19, triggering higher taxes.
• Not Adding or Updating Beneficiary Information: Even with a trust, certain accounts, like retirement and life insurance policies, will pay directly to listed beneficiaries. If you haven’t listed one or updated it recently, the wrong person may inherit those assets.

Mistake #3: Not Communicating Your Estate Plan/Wishes to Family or Your Professional Team

While you may have an estate plan, a key action is communicating your wishes and designations with both your heirs and professional team, including your attorney and wealth advisor. Failing to communicate can lead to additional stressful situations, such as:

• Family Conflict and Confusion: During an already emotional time, your family may have to interpret your end-of-life wishes, have disagreements about the distribution of assets, not know which accounts exist, or be unprepared for their designated roles, such as an executor or financial power of attorney.
• Costly or Lengthy Inheritance Process: If your heirs don’t have access to your professional team, account information, or digital assets, it could delay the process and increase legal fees while they locate them or decipher your plan.
• Missed Planning Opportunities: If your attorney and financial advisor do not have access to your full financial plan, they won’t be well-positioned to implement tax-efficient strategies or vehicles to protect your wealth, which could lead to titling mistakes, missed tax opportunities, probate, and more.

How to Avoid Common Estate Planning Mistakes

With the help of professionals, like an estate planning attorney, CPA, and financial advisor, you can better align your strategies, inform and prepare your heirs, and avoid common mistakes. Here are some estate planning takeaways to remember:

• Ensure your assets are titled correctly so they are distributed according to your wishes and your heirs can capture inheritance benefits, such as a step-up in basis for transferred property.
• A revocable living trust helps protect large assets, like your home, outlining who receives what, when, and how. It also generally bypasses the probate process, keeping wealth transfers private.
• Discuss property and capital gains tax implications with a tax professional.
• Review and update your beneficiaries at least annually, or when a major life event occurs, such as a marriage, divorce, the death of a loved one, a birth, or the start or end of a business.
• Communicate your plans with your family. Your attorney or financial advisor can help facilitate conversations to share roles and designations, provide introductions to your professional team, outline digital access instructions, and identify the location of your critical documents and login credentials.
• Update your professional team regularly or as major life events occur, so they can adjust your plan accordingly.

Estate Planning with Monarch Wealth Strategies

While estate planning is a foundational component of sound financial planning, it can be easy to overlook or misunderstand its implications. At Monarch, we can help you develop and update your plan and serve as a resource to your family and your extended professional team, as needed.

If you’ve yet to engage an estate planning attorney, please contact us, and we can connect you with a trusted, local referral. If you’d like to discuss drafting your estate plan or ensuring it covers all your financial bases, please contact us today.

 

Sources:

1. Villanova, P. (2024, March 1). How much probate costs in California. SmartAsset. https://smartasset.com/estate-planning/probate-costs-in-california
2. California State Board of Equalization. (2025, June). Proposition 19 fact sheet: Intergenerational transfer exclusion (Publication 801). https://boe.ca.gov/pdf/pub801.pdf