20 Common Estate Planning Mistakes to Avoid
Estate planning is crucial for asset management and family care. Avoid common mistakes like outdated wills, missing trusts, or neglecting digital assets.
Planning your estate is a vital step toward protecting your loved ones and honoring your wishes. But even with the best intentions, mistakes can happen. Let’s explore 20 of the most common estate planning mistakes—and how you can avoid them.
1. Not Having an Estate Plan at All
It’s a common misconception that estate planning is only for the wealthy. In reality, everyone can benefit from having a clear plan. Not having one leaves you wide open to all sorts of issues. (There are plenty of reasons why people delay estate planning, but they’re not good reasons.)
2. Procrastinating the Process
Delaying estate planning can lead to unnecessary complications. Starting early ensures that you prepare for any eventuality.
3. Failing to Update Your Estate Plan
Life events like marriage, divorce, or having children should prompt an update. Keeping your plan current is crucial.
4. Overlooking Digital Assets
From social media accounts to cryptocurrency, digital assets often go unaddressed. Catalog these in your plan.
5. Ignoring Health Care Directives
Without a clear health care directive, decisions about your medical care may fall to someone unfamiliar with your wishes.
6. Choosing the Wrong Executor
An executor should be trustworthy, organized, and capable of handling complex tasks. It’s not always best to choose someone because of convenience (e.g., the closest family member).
7. Forgetting to Name Guardians for Minor Children
If you have kids, designating a guardian is essential to ensure their care aligns with your values.
8. Not Planning for Estate Taxes
Failing to account for taxes can reduce the amount that passes to your heirs. Tax-efficient strategies can help maximize your estate for them.
9. Leaving Beneficiary Designations Outdated
Beneficiary designations on accounts like life insurance override wills, so keep them up to date.
10. Overcomplicating or Oversimplifying Trusts
A poorly designed trust can lead to confusion and disputes. Work to strike a balance between clarity and specificity.
11. Forgetting About Contingent Beneficiaries
Always name secondary beneficiaries to ensure proper distribution of your assets, even if primary beneficiaries can’t inherit.
12. Assuming a Will Avoids Probate
Many people mistakenly believe a will helps avoid probate. Including a tool like a revocable trust can help streamline the process.
13. Overlooking Funeral Instructions
Clearly stating your funeral wishes can spare your loved ones the burden of making tough decisions during a difficult time.
14. Failing to Include Charitable Giving
If philanthropy matters to you, include charitable donations in your plan to leave a lasting legacy.
15. Not Protecting Loved Ones with Special Needs
Establishing a special needs trust can safeguard benefits for loved ones who require lifelong care.
16. Skipping Asset Inventory
A complete inventory helps ensure you leave nothing out—financial assets, sentimental items, and everything in between. (Here’s an estate inventory checklist for you.)
17. Forgetting About Business Succession
If you own a business, a clear succession plan can protect its continuity and value for your heirs.
18. Not Funding a Your Trust
Not funding a trust means setting up a trust but failing to transfer your assets into it. This step is critical—without it, the trust is essentially an empty shell.
19. Failing to Communicate the Plan
Family disputes often arise when plans are unclear. Discuss your wishes with those affected to minimize misunderstandings.
20. Not Reviewing Plans Periodically
Estate planning isn’t a one-and-done task. Regular reviews ensure your plan adapts to life’s changes.
Avoid Common Estate Planning Mistakes
Avoiding these common estate planning mistakes can save your family time, money, and unnecessary stress. By taking proactive steps, you can create a plan that protects what matters most to you.
