The top myth when it comes to estate planning: Estate planning is for rich people.

Wrong!

Even if your net worth has taken a hit in this financial crisis, you must have an estate plan in place to protect your loved ones. If you don’t take care of the basics, the government will step in and make decisions about your estate when you are gone.

It’s easy to put off thinking about a subject that involves talking about your death, but trust us, it’s very necessary.  Don’t leave your loved ones to deal with messy legal issues (and potential tax issues) when you are gone. Some smart estate planning decisions today will pay huge dividends when you're gone.

Let’s make sure you avoid the 8 most common (and costly) estate planning mistakes we've seen people make time and time again through the years.

Mistake #1: Having No Plan at All

It may seem obvious, but the biggest estate planning mistake you can make is not starting one at all...yet it is extremely common for folks to just ignore this crucial step.

While it does take a commitment to get started, this is a decision that will pay dividends for you and your family for generations to come. It will also save you money and heartache down the road. Why wouldn't you want to protect your assets and loved ones this way?

Mistake #2: Thinking Estate Planning is for the Wealthy

Completely untrue these days. You don't have to have a sprawling estate with maids and a gardener to warrant needing protection. Besides, have you added up how much you're really worth (home, pension assets, etc.)? We're all a little less wealthy than we were a year ago, but you still may be worth more than you think!

Mistake #3: Leaving Everything to Your Spouse

It seems natural to pass everything on to your spouse. By keeping all of your assets in both names, your spouse may take full ownership—tax-free—of your assets upon your death. But when your spouse dies, there is a limit on how much he/she can leave of your assets to heirs. The good news is that the limit has increased in recent years, from $2 million in 2006-2008 to $3.5 million in 2009.

Mistake #4: Having Life Insurance in the Name of the Insured

It may surprise you to learn that life insurance proceeds are normally included in the assets of the deceased. Many people don't realize this. Keeping the plan in your name may result in a big chunk of the policy's proceeds going to the state/IRS in taxes. And didn't you buy the policy with your heirs in mind in the first place?!

A relatively simple life insurance trust may avoid the taxation of the proceeds and will control the distribution of the policy's proceeds.

Mistake #5: Not Taking Advantage of Annual Gift Exclusions

Giving money gifts can be confusing, because of the tax implications. You can give gifts of up to $13,000 (up from $12,000 in 2008) to anyone you choose without any tax liability to you or the recipient. This reduces the value of your estate, and therefore the tax liability, when you die. It also helps your loved ones right now!

Mistake #6: Not Utilizing Trusts When Appropriate

Writing a will is the bare minimum for estate planning. Beyond the will, talk with your estate planning attorney about the judicious use of trusts, which are often more detailed than wills. This will lead to less fighting among your heirs and will give the executor of your assets the ability to take care of you if you become mentally/physically incapacitated.

Mistake #7: Doing it Yourself

Forget it. This is too important to be done incorrectly. Would you risk many, many thousands of dollars of assets not being distributed as you would wish just to save a few hundred or thousand dollars in attorneys' fees? We hope not!

A "do-it-yourself" will kit can be helpful to gather the kind of information that you'll need when you sit down with a trust and estates attorney, but you should not try to do it entirely yourself!

Mistake #8: Not Reviewing and Updating Your Will

Have you moved to another state? Had another child or grandchild? Become incapacitated in any way? Been divorced? All of these life changes (and many others) are reasons to review and likely amend your will and trusts.

Once you've drawn up a will, don't just stick it in a drawer and forget about it. Make a point to review your will at least every five years, but also when there is a major event such as a death in the family, loss of a job, an inheritance, etc. In some cases, a change of beneficiary and/or changes in asset distribution may be in order.

The One Thing You Must Do

There's one point we can't emphasize enough: There is no substitute for sitting down with a trust and estates attorney to properly plan your estate.

How do you find a good one? Ask your friends, your accountant or your banker for a referral, but if you are still struggling to find the right attorney, begin your search at www.lawyers.com and www.martindale.com. We encourage you to get to work on this now if you're not caught up in your estate planning.

When something happens to you, the distribution of your assets will be so important for your loved ones. Please don't let the government make those decisions for you because you didn’t have the estate planning basics in place.