The 6 Biggest Estate Planning Mistakes

If you’re like most people, you have the best of intentions regarding how you want your estate distributed when you die or your affairs handled should you become incapacitated. Unfortunately, without proper planning, your best intentions may not be enough. Here are six of the most common estate planning mistakes people make: 

1 – Failing to plan. The biggest mistake is failing to create a plan in the first place. Without an estate plan, your assets will be distributed according to the law in the state where you live. Usually, if you are married, your spouse is entitled to a portion of your estate and the rest is divided among other your children.  The share to which they receive depends on a number of factors, including the size of your estate and whether all of your children are also the children of your surviving spouse. This can result in unexpected outcomes. If a child is deceased, what happpens to their share may depend on whether they have children. If you are single, with no children, your estate may go to your parents, or siblings or neices and nephews. If you have absolutely no living relatives, then your estate will go to the state. This is probably not what you want to have happen to your assets. In addition, you need an estate plan to name the guardian of the minor children, and the conservator or trustee who will take care of their assets. You also need to name the people who will have decision-making authority for you and your assets if you become incapacitated.


2 – Doing it yourself. It is tempting to try to save money by using a do-it-yourself online will service or just writing something up yourself, but these poorly drafted documents may only cost you or your heirs additional money in the end. Using a DIY estate planning program means taking a large risk that can affect one’s family for generations to come.  The problems created by not getting competent legal advice probably won’t be borne by the person creating the will, but they may well be shouldered by the person’s children and grandchildren.  An experienced estate planning attorney will help you avoid these pitfalls by guiding you to use the plan that best suits your family situation, your assets and your budget.


3 – Not planning for disability. A properly drafted estate plan not only specifies what will happen to your assets when you die; it also spells out what happens if you become incapacitated. It is important to have documents, such as a power of attorney and health care proxy (Patient Advocate Designation), that appoint someone you trust to act on your behalf if you can’t act for yourself. 


4 – Failing to fund a trust. Once you draft an estate plan, you aren’t done. If your estate plan includes a trust, you need to actually fund the trust — by retitling assets in the name of the trust — or the trust will not operate to avoid probate in the way you intend.


5 – Not checking your beneficiary designations. You should periodically review your retirement plan beneficiary designations to make sure they aren’t outdated. Retirement accounts do not follow your will or trust—they are distributed according to the beneficiaries you designate as part of your retirement plan, account or policy. It is critical that you check these designation ou to make sure you have named a beneficiary and the beneficiary is who you want it to be. Too often, people are mistaken when they rely on their memory about whom they have named as a beneficiary. It is also important to be sure you have named a contingent (or “back up”) beneificiary in case the first beneficiary you named is no longer living.


6 – Not reviewing the plan. Once you’ve got an estate plan in place, it is important to keep it up to date. Circumstances change over time and your estate plan needs to keep up with these changes. Major changes that may affect your plan include getting married or divorced, having children, or experiencing an increase or decrease in assets. Even if you don’t have any major changes, you should review your plan periodically to make sure it still expresses your wishes. Our estate plans include a complimentary annual Continuing Client Care conference which is like a “check-up” to review your plan and make sure it still meets your needs.

Get a jump on your your New Year’s Resolutions by contacting us today and scheduling an estate planning consultation to get this checked off your “To-Do” List!

If you have specific questions about your situation or would like to learn more, reach out to the team at WBH here.

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