Estate Planning Mistakes to Avoid: Insights from Experienced Lawyers

Estate planning is complicated, involving many moving parts that must work together seamlessly for your plan to be effective. Without proper legal guidance, it is easy to make mistakes that sabotage your estate plan.

We asked estate planning attorneys at Hammond Law Group to share some of the most common estate planning mistakes they see people make. Heed their insights to avoid these errors and craft an airtight plan.

Not Having a Plan at All

The most fundamental mistake is failing to do any estate planning at all. Without core documents like a will, trust, and powers of attorney in place, you lose control over the distribution of your assets, medical decisions, and care for minor children if you die or become incapacitated. Having no plan leads to chaos.

Outdated Plan

One of the top mistakes attorneys cite is people setting up an estate plan once and never updating it. Outdated financial information, beneficiaries, executors, and unclear or contradictory provisions in the original documents can render the old plan ineffective. You should review your plan with a lawyer every 2-3 years.

Do-It-Yourself Planning

While DIY estate planning websites make it easy to create generic documents like basic wills, the experts note major risks with forgoing professional legal advice. DIY plans often have invalid formatting, lack personalization, and address state-specific requirements that could invalidate the entire plan.

Unclear Asset Transfers

Failing to clearly coordinate accounts, beneficiaries, and asset ownership into your plan is a common pitfall. Not designating beneficiaries on retirement accounts or updating beneficiary forms as life changes is a frequent error attorneys point out. Keeping your lawyer updated on your assets is key.

Not Funding Trusts

Creating a trust without properly transferring assets into it is a big mistake. Trusts only control what they own. Titling assets in the trust’s name and changing beneficiary forms is crucial. Your lawyer can help guide the process.

Incorrect Joint Asset Titling

Placing another person on financial accounts or property without considering titling implications is an area where lawyers see issues. Joint accounts with rights of survivorship, tenants in common, and tenants by entirety titling all have major estate planning impacts. Review titling with counsel.

Missing Contingent Beneficiaries

If your primary beneficiary dies before you, assets may go through probate without a named contingent beneficiary. Attorneys stress specifying secondary beneficiaries as backups on all accounts to avoid this unintended outcome if a beneficiary predeceases you.

Handwritten Changes to Documents

Your lawyer will advise that handwritten changes or amendments to estate planning documents are often deemed invalid. Any updates should be made officially by your estate planning attorney to ensure enforceability. Relying on handwritten notes leads to disputes.

Naming Co-Agents

While it seems safer, naming multiple agents on power of attorney forms can require them to act jointly. If one agent becomes unavailable, no one can take action for you. Appointing successor agents is usually better than naming co-agents, lawyers recommend.

Forgetting Digital Assets

People too often overlook estate planning for digital assets like social media, emails, photos, domain names, etc. Without clear legal authority, online accounts may not be accessible after you die. Allow the power of attorney access to digital accounts and create a digital assets inventory.

Not Planning for Incapacity

A common error is focusing only on what happens after death and failing to plan for the possibility of incapacity from illness or injury. Lacking critical documents like medical and financial powers of attorney leaves you vulnerable if you become incapacitated.

Blending Estate Plans

Attorneys caution against blending estate plans with a new spouse without reviewing the implications. Your financial goals or desired beneficiaries may differ from your spouse’s. Seek legal guidance to thoughtfully integrate plans to meet both parties’ wishes.

Not Planning for Long-Term Care

Failing to consider potential long-term care needs and associated costs as part of estate planning is an oversight lawyers see too often. Long-term care planning options can help prevent such illness from prematurely depleting your assets.

Not Updating Beneficiaries

Forgetting to name a new spouse or children as beneficiaries on retirement accounts and insurance policies after marriages, divorces, or birth of new heirs is a common and potentially costly mistake attorneys mention. Keep beneficiary designations current.

Forgetting About Taxes

An estate plan crafted without tax planning risks losing a substantial portion of assets to unnecessary estate taxes, capital gains taxes, and income taxes. Work with a lawyer to lawfully structure your plan for maximal tax savings.

Skimping on Due Diligence for Fiduciaries

Selecting executors, trustees, and other fiduciaries without thoughtful vetting of their qualifications, temperament, and willingness to serve often backfires. Do your due diligence with the guidance of your lawyer.

By learning from the missteps and oversights lawyers commonly see, you can avoid these estate planning mistakes and craft a plan that truly supports your goals. Partnering with an attorney like those at Hammond Law Group in Colorado Springs is the best way to protect your family and assets.

By Christine Mayle