1. Most people don't think of themselves as having an "estate".

Everything you own is part of your estate. If you don't plan properly, your estate may not he distributed as you wished.

2. Underestimating the size of your estate.

Many people may not be aware of the Unified Credit or they don't believe that their total estate is greater than the Unified Credit equivalent, which is the amount that would be shielded from estate taxes. (For more details about the Unified Credit, see Point 6.) Your estate's value is comprised of everything you own or have ownership in, such as a life insurance policy, a business interest and any personal assets.

3. Relying solely on a will for estate planning.

A will does not prevent the court from controlling assets for an heir who is a minor or incapacitated. Nor does it control all of your assets, such as those that are jointly owned or have beneficiary designations.

4.Thinking a revocable living trust will save on estate taxes.

A common misconception is that assets in a living trust will pass estate-tax free. Living trusts are revocable and assets placed in a living trust are still included in the grantor's estate and subject to estate taxes.

5. Not funding a living trust.

Some people establish a living trust, but they fail to retitle their assets into the trust.

6. Leaving everything to your spouse.

By leaving everything to your spouse, you may lose the opportunity to use the Unified Credit. The Unified Credit allows you to pass up to $1,000,000 in 2003 to your heirs-free from estate taxes-and this amount adjusts up to $2,000,000 in 2006. Special planning should be done to incorporate this strategy into your estate plan, so that your spouse can benefit from the available credit.

7. Owning the majority of your assets jointly.

Unfortunately assets that are owned jointly cannot be used to fund the Unified Credit.

8. Owning life insurance in your own name.

Life insurance proceeds can dramatically inflate an estate's total value if the policy owned is by the insured, because it is included in the owner's estate. Gifting an insurance policy to an Irrevocable Life Insurance Trust removes the value from the estate and provides liquidity for the heirs.

9. Not planning for the payment of the estate tax.

Estate tax payments are generally due within nine months of death. This deadline could force the family to borrow, liquidate or sell assets, such as a business interest, securities, or withdraw assets from retirement plans to pay estate taxes. Life insurance placed in an irrevocable trust can be a cost-efficient way of providing the necessary money for your family to pay estate taxes and other costs.

10. Not keeping an estate plan current.

Failure to keep your estate plan up to date during life transitions may result in the improper disposition of property to your heirs, as well as higher levels of taxation.