The Top Ten Mistakes Made in Estate Planning

The Top Ten Mistakes Made in Estate Planning

Mistake #10:  No planning at all!

Only 55% of Americans have an estate plan in place (1).  Unfortunately,  the  failure  of  having an  estate  plan  means  that  the  court  system  and  state  statutes  will  govern  where  an  estate goes when someone dies,  leading  to  unnecessary  probate proceedings,  fights  over who  may   serve  as  executor  or  personal  representative  and  unnecessary  taxes  and fees.


Mistake #9:  Waiting until the last minute to plan!

Unfortunately, we often receive phone calls from folks who have received a bad diagnosis and / or know that they are going to pass away. This is an extremely stressful time and the wrong time to plan your estate. The best time to plan an estate is when you are healthy and can make clear decisions.


Mistake #8:  Failure to update your estate plan!

Many clients we meet with have not updated their plan in 10, 20, or even 30 years! Life happens, and circumstances change dramatically. Perhaps one of your children has gone through a divorce, or a loved one of yours has passed. Failure to update the plan could mean that it will not work how you desire it to at the time of your death. Federal and state laws have changed dramatically in the last 15 years, and your estate plan may be unnecessarily complicated or just out of date.


Mistake #7:  Forgetting about your “stuff” (i.e., personal property)!

When we work with individuals on estate planning, we plan for disposition of tangible personal property.   Where do items such as jewelry, firearms, artwork and family heirlooms go when you die? Sadly,  I  have learned  that  the  number  one  reason  family  members  fight after a loved one  dies is over belongings.  By properly using a laundry list, you  can  ensure  that  it  is  less  likely  your  children  will  fight  over  your  “stuff”  when  you  pass away.


Mistake #6:  Failing to plan for special needs!

If one of the beneficiaries of your estate plan has a special need, such as  a  mental  health problem or a disability that renders  them  dependent  upon  the  government  for their support, leaving money to the special needs individual through your estate may be a mistake because you might disqualify  them  from  receiving  those  benefits. In  these  circumstances, you should have a “special needs trust” receive the money  for  the  benefit  for  the  special  needs  individual,  in  a  manner  not  disqualifying  them  from  receiving  government benefits.


Mistake #5:  Failure to avoid probate!

Most of our clients wish to avoid probate, by using revocable living trusts and other probate avoidance measures. However, if the trust is not utilized and funded correctly, an unintentional probate may happen. If you own more than $50,000 worth of property outside of your trust, your estate will still have to be probated. If you have a trust, it is important to use it. If you are not sure that you have structured assets properly to avoid probate, please call us and we can help.


Mistake #4: Failure to safely keep original estate planning documents!

It is  important  for  you  to  know  where  your  original  estate  planning  documents  are  located  and your personal representative or trustee has access to them.   Several times a year, we receive a call from clients who have lost their documents and do not have copies of them.   As it relates to financial documents, one must be very careful in providing copies to anyone other than the named fiduciaries. On health care documents, it is very important that everyone named in the document has a copy of the healthcare power of attorney, as well as your treating physician and the hospital to which you are most likely to be admitted.


Mistake #3:  Failure to plan for long-term care!

The cost of long-term care continues to skyrocket, and many Baby Boomers have not done adequate planning for paying for long-term care.  There are several strategies, including gifting and irrevocable trusts, which can be effective in helping ease the burden of spending down most of one’s assets to pay for long-term care towards the end of life.  The standard look back period is five years, so the sooner that one plans for long-term care costs, including consideration of long-term care insurance, the better!


Mistake #2:  Naming the wrong people as your decision makers after you die!

Not enough thought is given as to whom will be in charge of your estate after you pass away. It is important that these individuals be trustworthy, not procrastinators and have the time to carry out your wishes. Unfortunately, childhood jealousies and rivalries arise after parents pass away, and naming your child to be your personal representative or trustee may not be the best idea for your estate plan.   We often recommend clients remove   the family dynamics and the burden of the hundreds of hours that it takes to serve as personal representative    or trustee and name an independent trust company or bank trust department to serve as the personal representative or trustee after you die. This is an excellent choice for many of our clients and should be considered.


Mistake #1:  Failure to review beneficiary designations!

Did   you   know   that   your   beneficiary   designations   on   life   insurance,   retirement   accounts,   annuities, and any banking  or  investment  account  that  has  a  beneficiary,  are  more  powerful  than  your  will  or  trust? In other  words,  it  does  not  matter  what  your  will  or  trust  states  if  your  beneficiary  designations do not align. It  is  necessary  to  review  your  beneficiary  designations  with  your  financial  advisor, accountant, trustee or estate planning attorney,  to ensure they work in conjunction with your estate plan.


All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. There are no guarantees any investment or strategy will meet its intended objective.  Estate planning can involve a complex web of tax rules and regulations. Tax laws surrounding estate-planning concepts are subject to change please consult an estate-planning attorney prior to making any financial decisions.  This information is not intended to provide specific legal, tax, or other professional advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. This information is not intended to provide specific legal, tax, or other professional advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor.

Get in Touch

In just minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Contact Us

Stay Connected

Business professional using his tablet to check his financial numbers

401(k) Calculator

Determine how your retirement account compares to what you may need in retirement.

Get Started