The 5 Most Common Estate Planning Errors (And How to Avoid Them)
Discover the 5 most common estate planning mistakes—and how to avoid them to protect your legacy and loved ones.
Estate planning is essential for protecting your loved ones and ensuring your wishes are honored after you’re gone. However, even with the best intentions, it’s easy to make estate planning mistakes that lead to costly consequences. A simple oversight can result in a lengthy probate process, family disputes, or assets not ending up where you intended.
In this article, we highlight five of the most common estate planning mistakes and how to avoid them. These estate planning tips will help you sidestep pitfalls like probate delays and unnecessary taxes. Whether you’re writing your first will or updating an existing estate plan, knowing what mistakes to avoid will save your family time, money, and stress down the road.
Mistake #1: Not Having an Estate Plan
One of the biggest mistakes is not creating an estate plan at all. Surprisingly, a majority of adults have no will or trust in place, meaning the state’s default laws will decide what happens to their assets. Without at least a basic will, you lose control over who inherits your property. Instead, the state (through intestacy laws) determines how to distribute your estate, which may not match your wishes or your family’s needs. This also means your estate will likely go through probate – a court-supervised process that can take a long time and cost your family unnecessary legal fees.
Many people wonder how to avoid probate, and the key is to be proactive: have a proper estate plan in place. If you die without a will or trust, probate is almost certain. To avoid this outcome, create an estate plan as soon as possible, even if you think your assets are small. Start with a simple will to specify your beneficiaries and guardians for minor children. For added protection, consider setting up a revocable living trust for major assets like your home – assets in a living trust can bypass probate entirely, allowing them to transfer directly to your heirs. An experienced estate planning attorney can help you draft the right documents tailored to your situation and ensure they meet all legal requirements. The sooner you start, the better peace of mind you’ll have knowing your family is protected.
Mistake #2: Forgetting to Update Your Estate Plan
Your estate plan is not a one-and-done deal. One common estate planning error is failing to update your will, trust, and other documents over time. Life changes — and so should your estate plan. If you forget to update your plan after major events, you could accidentally leave assets to an ex-spouse, omit a new child or grandchild, or name the wrong person as executor or beneficiary.
Make it a habit to review and update your estate plan whenever any of the following events occur:
Marriage or Divorce: Getting married, divorced, or remarried should prompt an immediate update to reflect your current intentions.
Birth or Adoption: If you have a new child or grandchild, you’ll want to include them (and perhaps name a guardian for minors).
Death or Incapacity: Remove or replace anyone in your plan who has passed away or is no longer capable of serving (e.g. a deceased beneficiary or an executor who has become ill).
Significant Change in Assets: Buying a home, starting a business, receiving an inheritance, or other big financial changes may require adjustments to your plan.
Moving to a New State: Estate laws vary by state, so if you relocate, have your documents reviewed for compliance with the new state’s laws.
Even if none of these events happen in a given period, it’s wise to review your estate plan every 3–5 years. Laws can change, and your own preferences might shift over time. Regular check-ups will ensure everything still aligns with your wishes. Consider scheduling periodic reviews with your attorney or financial advisor. Keeping your plan up to date will prevent unpleasant surprises and ensure your estate planning documents work as intended when they’re needed.
Mistake #3: Not Naming the Right Executor
Choosing the wrong person to carry out your wishes can undermine even the best-written estate plan. The executor of your estate (sometimes called a personal representative) is responsible for managing your affairs after you pass away – this includes gathering assets, paying off debts, and distributing assets to beneficiaries. Not naming the right executor (or failing to name alternates) is a mistake that can lead to delays and conflicts.
When selecting an executor, pick someone who is trustworthy, organized, and capable of handling financial and legal responsibilities. For example, an adult child, sibling, or close friend who is responsible and in good health could be a good choice. Avoid choosing someone who is easily overwhelmed or unfamiliar with basic money matters. If an executor lives very far away or has health issues, they may have difficulty performing the role when the time comes. It’s also a good idea to name a backup (alternate) executor in case your first choice is unable or unwilling to serve when needed.
To avoid this mistake, talk with your proposed executor in advance. Make sure they understand their duties and are willing to take on the responsibility. If you don’t have a suitable person in mind, you can appoint a professional executor or an institution (like a trust company) to handle the estate. A quick discussion with an estate planning attorney can provide guidance on choosing the best executor for your situation. By selecting the right person and an alternate, you’ll help ensure your estate is administered efficiently and according to your wishes.
Mistake #4: Ignoring Beneficiary Designations
Some of the most overlooked estate planning mistakes involve beneficiary designations on financial accounts and insurance policies. Many assets allow you to name a beneficiary directly on the account, separate from your will. These include life insurance policies, retirement accounts like 401(k)s and IRAs, annuities, and bank or investment accounts with “payable on death” (POD) or “transfer on death” (TOD) provisions. If you ignore these beneficiary designations or forget to keep them updated, your assets may not go to the intended recipients.
Remember that beneficiary designations override your will. For example, if your old 401(k) still lists your ex-spouse as the beneficiary, that account will go to your ex-spouse even if your will says everything should go to your current spouse. Failing to update these forms can completely derail your estate plan.
To avoid this mistake, make it part of your estate planning checklist to review all your beneficiary designations regularly, especially after major life changes. Ensure that the individuals (or trusts) named on these documents are consistent with your overall estate plan. Common assets that have separate beneficiary forms include:
Life insurance policies – Update the beneficiary if you’ve had a change in marital status or want to add/remove someone.
Retirement accounts (401(k), IRA, etc.) – Make sure the right primary and contingent beneficiaries are named, since these accounts often represent a large portion of one’s assets.
Bank accounts with POD designations – Verify that your payable-on-death beneficiaries are current. You can name individuals so that upon your death, the funds go directly to them without probate.
Investment/brokerage accounts with TOD – If you have transfer-on-death set up for stocks or brokerage accounts, keep those beneficiary instructions updated.
Set a reminder to check these beneficiary designations every few years and especially when updating your will or trust. By keeping these forms up to date, you ensure that your assets will pass to the correct people. It only takes a few minutes to review beneficiary information, but it can save your family from confusion and legal battles later. Don’t let an outdated form undermine your estate plan—coordinate your accounts with your will or trust for a cohesive plan.
Mistake #5: Not Planning for Taxes and Debts
Another serious oversight is ignoring the impact of taxes and debts on your estate. When people think about estate planning, they often focus on “who gets what” and forget that Uncle Sam and creditors get their share first. If your plan doesn’t account for expenses like estate taxes, final income taxes, outstanding debts, and funeral costs, your loved ones might have to use a chunk of their inheritance to cover those bills. In short, failing to plan for taxes and debts can significantly reduce what your heirs receive.
For example, consider estate taxes: if your estate exceeds the federal or state estate tax exemption limits, the tax bill could be substantial. Even if estate tax isn’t an issue for you, there are other costs to plan for – such as your remaining mortgage, car loans, credit card debt, or medical bills. These obligations won’t disappear after you pass; they must be paid by your estate. Without planning, your family may be forced to sell assets or use personal funds to settle these debts and taxes.
How to avoid this mistake: Discuss the tax and debt implications with your estate planner or financial advisor when crafting your plan. If you suspect your estate might be subject to estate taxes (for instance, if you have significant assets or live in a state with its own estate/inheritance tax), consider strategies to minimize that burden. Such strategies could include gifting assets to loved ones while you’re alive, setting up trusts designed for tax efficiency, or purchasing life insurance specifically to cover potential estate tax or debt obligations.
It’s also wise to make a list of all your outstanding debts and expected final expenses. Then, ensure your estate plan addresses how those will be paid. You might allocate certain assets to be sold for debt payment, or designate a beneficiary to receive funds with the understanding they’ll pay a particular debt. By planning ahead for taxes and debts, you can leave your heirs more of your wealth (instead of a financial burden). This kind of foresight is often best done with professional guidance – a knowledgeable advisor or attorney can help you build a tax-efficient strategy so that more of your legacy goes to your family and less to creditors or the government.
How an Estate Planning Attorney Can Help
While it’s possible to do some estate planning on your own, working with an experienced estate planning attorney can be invaluable in avoiding mistakes. Estate planning attorneys understand the complex laws and have seen the pitfalls that can occur. They will ensure your documents are properly drafted and executed, and they’ll tailor your plan to fit your unique circumstances (family dynamics, asset types, business interests, etc.).
Here are a few ways an attorney can help you get it right:
Comprehensive Guidance: An attorney will walk you through all the components of a solid estate plan – wills, trusts, powers of attorney, advance healthcare directives, beneficiary planning, and more – so nothing important is overlooked. They can provide estate planning checklists and expert advice to cover all bases.
Customized Solutions: Everyone’s situation is different. A skilled lawyer can suggest strategies to meet your goals, such as how to avoid probate for certain assets, how to minimize estate or inheritance taxes, and how to protect heirs who might not be good with money. For instance, they might recommend a trust for a beneficiary who is a minor or has special needs, ensuring that inheritance is managed responsibly.
Regular Updates and Reviews: Law firms often remind clients to update their plans and may offer periodic reviews. Your attorney can keep your estate plan current with changing laws (for example, tax law updates or new estate planning tools) and with your life changes. This proactive approach means your plan stays effective over time.
Peace of Mind: Perhaps most importantly, having a professional involved gives you confidence. You know your documents are legally sound and your wishes will be carried out. An attorney can also serve as a point of contact for your family when the time comes, guiding them through the process and preventing mistakes during the estate administration.
For example, at DK Law Group our estate planning attorneys in Maryland have guided many individuals and families through these steps. We help clients create new estate plans or review and improve existing ones, always aiming to simplify the process and remove stress. By working with a professional, you’re far less likely to miss critical details. In the end, you’ll have an estate plan that not only avoids the common mistakes we’ve discussed, but also gives you confidence that your legacy is secure.
Conclusion
Estate planning may seem daunting, but as we’ve seen, the biggest pitfalls are easy to avoid with a bit of knowledge and forethought. By taking the time to build a comprehensive plan – and keeping it updated – you can spare your loved ones from unnecessary problems and expenses down the line. In summary, here’s a quick estate planning checklist to help you avoid the most common mistakes:
Create a plan early: Don’t delay. Even if you think you don’t have “enough,” make a basic will or trust now to avoid probate and ensure your wishes are known.
Update regularly: Revisit your estate plan after major life events (marriage, divorce, births, deaths) and every few years in between. Keeping it current prevents unpleasant surprises.
Choose trustworthy helpers: Select the right executor (and backup), guardians for minors, and agents for powers of attorney. Make sure they are capable and understand your wishes.
Review beneficiaries: Keep beneficiary forms for life insurance, retirement accounts, and other payable-on-death accounts up to date so they align with your overall plan.
Plan for expenses: Account for any estate taxes, debts, or final expenses. Set aside funds or strategies (like insurance or trusts) to handle these, so your heirs aren’t burdened.
By following this checklist and the advice above, you can craft an estate plan that protects your family and preserves your legacy. The key is being proactive and thorough. A well-prepared estate plan will provide you and your loved ones with peace of mind.
For personalized guidance, don’t hesitate to consult a professional. Contact DK Law Group today to get started on your estate plan. Call us at (443) 739-6724 or email diana@dklawmd.com. We’re here to help you create a solid plan that protects your legacy and gives your family peace of mind.
Estate Planning FAQ
What is the biggest mistake in estate planning?
The single biggest mistake in estate planning is not having an estate plan at all. When you don’t create a will, trust, or any formal plan, you essentially let state law decide who inherits your assets. Dying without a will (known as dying “intestate”) means a court will appoint an administrator and your estate will go through probate. This process can lead to delays, higher costs, and results that may not reflect your true wishes. By writing a basic will and setting up beneficiaries, you take control over these decisions. In short, procrastination is the biggest mistake – it’s crucial to put at least a simple plan in place now, rather than leaving your legacy to chance.
How can I avoid probate?
Probate can be time-consuming and costly, but there are several ways you can avoid probate or minimize it:
Set up a living trust: Placing major assets (like real estate, investments, or bank accounts) into a revocable living trust allows them to pass to your beneficiaries without going through probate. You maintain control of the assets during your lifetime as the trustee, and after you pass, the successor trustee transfers assets directly to your beneficiaries per your instructions.
Use proper beneficiary designations: Ensure you’ve named beneficiaries on accounts like life insurance, retirement plans (401(k), IRA), and any bank or brokerage accounts with POD/TOD designations. Assets with a named beneficiary transfer automatically to that person and do not require probate. Keep those beneficiary designations updated to reflect your current wishes.
Joint ownership with survivorship: Owning property jointly with someone (for example, joint tenancy with right of survivorship or tenancy by the entirety for married couples) means that when one owner dies, the property automatically goes to the surviving owner. This bypasses probate for that asset. Similarly, transfer-on-death deeds for real estate (available in some states) allow you to name a beneficiary to automatically inherit your home.
By using these tools and keeping your estate plan up to date, you can significantly reduce or even eliminate the need for probate. The goal is to arrange your assets so that there’s nothing left for the probate court to handle. This way, your heirs can receive their inheritance faster and with fewer legal hurdles.
Can I write my own estate plan?
You can write your own estate plan using DIY resources – for example, there are online will templates and estate planning forms available. For simple situations, a do-it-yourself approach might seem sufficient and can save upfront costs. However, proceed with caution. DIY estate planning comes with risks, and mistakes may only become apparent when it’s too late (after you’re gone).
It’s important to understand that estate laws are complex and vary by state. If your documents aren’t executed properly or don’t comply with your state’s specific requirements, they could be deemed invalid. Important provisions might be missing or worded incorrectly. For instance, if you try to write your own will without the proper number of witnesses or fail to update a form correctly, the error might invalidate the will or cause a portion of your assets to go through probate or intestacy. People with more complicated circumstances – such as having minor children, a blended family, a business, or significant assets – are especially vulnerable to issues with DIY estate planning.
While a DIY estate plan might work for very basic estates, most people find that consulting an estate planning attorney is well worth it. An experienced lawyer will ensure your documents are legally sound, customized to your needs, and cover scenarios you might not have considered. They can also advise you on strategies (like trusts or tax planning) that a simple template won’t address. In the long run, having a professionally prepared estate plan can save your family from costly legal battles and heartache. It provides peace of mind that everything is done correctly. If you’re unsure, you could start with a DIY draft to clarify your wishes, but have an attorney review it before it’s finalized. This way, you get the best of both worlds – your personal wishes are documented, and a professional ensures it’s all done right.