Common Mistakes and How to Avoid Them
Creating an estate plan is a huge step in the right direction, but small mistakes can lead to big problems. Being aware of these common pitfalls can help ensure your plan works the way you intend it to.
1. Procrastination
The single biggest mistake in estate planning is not doing it at all. It’s easy to put it off, thinking you have plenty of time. But life is unpredictable. Without a plan, you leave your loved ones to navigate a confusing legal system during a time of grief, and you give up your right to decide who inherits your property.
How to Avoid It: Don’t wait for a “perfect” time. Start the process now. Even a simple plan is better than no plan at all. You can always update it later.
2. Forgetting to Fund Your Trust
This is a critical error specific to trusts. Many people go through the process of creating a trust document but then fail to re-title their assets in the trust’s name. An unfunded trust is like an empty box—it’s useless. If your assets are not in the trust, they will have to go through probate, defeating the primary purpose of creating the trust in the first place.
How to Avoid It: Work with your attorney to create a checklist of all your assets. Methodically go through the process of changing titles, deeds, and beneficiary designations to reflect the trust’s ownership. Confirm that every intended asset has been properly transferred.
3. “Set It and Forget It” Mentality
Your life changes, and so should your estate plan. Major life events like marriage, divorce, the birth of a child, a significant change in financial status, or the death of a beneficiary can all make your existing plan outdated or even invalid.
How to Avoid It: Review your estate plan every three to five years, or immediately after any major life event. Check that your beneficiary designations are correct and that the people you’ve named as executor, trustee, and guardian are still the right choices.
4. Choosing the Wrong Executor or Trustee
It can be tempting to name your oldest child out of a sense of tradition, but that might not be the best choice. The roles of executor and trustee require significant time, organization, and integrity. Naming someone who is not up to the task or who has a history of financial irresponsibility can lead to disaster.
How to Avoid It: Choose someone who is responsible, fair, and capable of handling the administrative and financial duties. Have an honest conversation with them first to make sure they are willing to serve. Always name an alternate in case your first choice is unable or unwilling to act.
5. DIY Planning Without Understanding the Risks
While online legal forms can seem like a cheap and easy solution, they are fraught with risk. Estate planning law is complex and varies by state. A generic form can’t account for your unique family situation or financial circumstances. A small error in wording or execution (like not having the right number of witnesses) can invalidate the entire document.
How to Avoid It: While DIY forms can be a starting point for very simple estates, consulting with a qualified attorney is the safest way to ensure your documents are legally sound and achieve your specific goals. The cost of fixing a mistake is almost always far greater than the cost of doing it right the first time.
