13 Common Missteps That Could Impact Your Legacy

Estate planning is one of the most important things you can do for your loved ones, yet many people make critical mistakes that could create unnecessary stress for their heirs. Here are 13 common estate planning missteps and how to avoid them.

1. Failing to Plan

The biggest mistake you can possibly make when it comes to your Estate Plan is simply not making the time to do it. Unfortunately, it’s something too many of us put off. But failing to prioritize your plan, or not ensuring it’s complete, ultimately means you’re risking the financial future of your estate, your legacy, and most importantly, your loved ones.

The Fix: If you haven’t yet started your Estate Plan, if it’s been more than five years since you’ve updated it, or if you’ve recently had a major life event, take the time to sit down and either get started or review your plan.

2. Not Discussing with Family and Friends

Of course, there are exceptions to this rule, but if possible, it’s a good idea to have a conversation with your friends and family. Setting expectations now, where there is an opportunity for discussion if needed, could lessen the likelihood that there is any contention or disagreement after your passing. If this isn’t an option, there’s language you can write into parts of your Estate Plan that specify anyone who contests anything could be written out.

The Fix: Set aside time in advance to discuss your plan with your spouse or anyone you’ve named Executor or Trustee, and think about notifying specific people you name in your Will or Trust.

3. Naming Just One Beneficiary

You should always have more than one beneficiary designated for any of your assets. In the event that a beneficiary passes away before you do, you’ll want to have what’s known as a contingent beneficiary. This is who would be next in line to your estate or any given asset. Ideally, you should have more than one contingent beneficiary listed.

The Fix: For each asset, account, or policy, be sure to list a primary and one or more contingent beneficiaries.

4. Forgetting about Power of Attorney or Healthcare Representatives

Naming a Power of Attorney (either medical or financial) and/or a Healthcare Proxy is important, as these are the people who would step in to make decisions should you become incapacitated. Note that in most cases, these roles dissolve upon your passing.

The Fix: If your Living Will doesn’t designate a Power of Attorney or a Healthcare Proxy, make sure you have standalone documents that appoint a trusted person or people to make important financial and medical decisions for you.

5. Forgetting about Final Arrangements

Your loved ones will be grieving after you pass away, but planning in advance what you’d like to have happen (in terms of your funeral or burial arrangements) can be a blessing for those you leave behind. Another important component to this is making sure your wishes for end-of-life care are known (i.e. hospice, assisted living, etc.).

The Fix: Think about how you’d like your life celebrated and what type of funeral, memorial, or burial you want. Put that in writing so your loved ones know exactly what they can do to honor you. Likewise, end-of-life planning documents can be included in your Estate Plan too. All of this ensures your final wishes will be respected while alleviating just a little bit of stress for those grieving your loss or struggling to know what you would want.

6. Forgetting about Your Digital Assets

The idea of digital estate planning is relatively new, but it makes sense, given the technological world we live in. Be sure to include a Digital Estate Plan that lays out how you’d like all your digital assets to be handled after you pass away. This could be anything from social media accounts to online banking, to email accounts, and more.

The Fix: Part of your estate planning should absolutely include a Digital Estate Plan. Just like you do in other parts of your plan, you’ll want to name a Digital Executor who can ensure all your digital assets are handled properly.

7. Forgetting about Charities That Are Important to You

Particularly if you have a large estate, but even if you don’t have incredible wealth, you can still allocate some of your assets to benefit a charity that’s important to you.

The Fix: There are multiple ways you can leave parts of your estate to charities. Including the gift you want to bestow in your Estate Plan is one way to make sure your wishes are honored. Or, you can name a charity as a beneficiary of an asset, for example, the proceeds from an investment or life insurance policy.

8. Not Thinking About Your Children’s Futures

While your directions may be well-intentioned, there are cases where how you word things could come back to haunt your children or heirs. If your children are very young, you may want to include directions for how their guardian should spend assets, either to take care of them or to benefit them in other ways.

Other missteps could include assuming your children will want something when in fact they may not.

The Fix: It’s always best to leave specific guidance on how you’d want inheritances passed on to minors. And of course, think very carefully about how you word any stipulations on an inheritance.

9. Getting Too Specific

We normally advise you to be as specific as possible when writing your Estate Plan. However, there is one caveat to that. You may own assets at one point in life that you might not necessarily have in the future.

The Fix: Review (and update if needed) your Estate Plan every 3 to 5 years, or any time you have a major life event.

10. Improperly Funding Your Trust

A Trust is an excellent component to have in virtually any Estate Plan, but it could all be for naught if you don’t properly fund it.

The Fix: Follow all the steps to fund your Trust and be sure you know exactly what you need to do.

11. Not Considering Estate Taxes

Estate tax liability can put a huge dent in what you plan on leaving your beneficiaries.

The Fix: Know if the state you and your beneficiaries live in has a state estate tax, and understand what the limits are before you write your Will or Trust.

12. Not Securing Your Estate Plan

Having the best Estate Plan in the world won’t accomplish anything if your heirs can’t find it.

The Fix: Storing your Estate Plan in a fireproof safe is a great option. Don’t forget to tell your spouse or another trusted family member where it’s located.

13. Updating Your Plan Too Infrequently

Unfortunately, estate planning is not a set-it-and-forget-it deal.

The Fix: In addition to updating your Estate Plan after any major life event, do a general review every 3 to 5 years.

Your Wishes Can Flourish from a Flawless Plan
Crafting an Estate Plan is an act of profound generosity towards your family and loved ones—a true testament to your care and foresight. But even the best intentions can veer off track if you unknowingly fall into one of these common estate planning traps.

Are you ready to draft your first Estate Plan or schedule a review of your current arrangements? Let’s talk about how to get everything in place.