Having an estate plan, even an imperfect one, is usually better than having no plan at all. But an existing plan can still have serious flaws that defeat its overall goals or objectives. A plan based on misperceptions, including the idea that estate planning must be perfectly timed, can be nearly as problematic as putting off planning altogether.
If it has been a while since you revisited your estate plan, or if you are still waiting to get started, knowing what not to do can help you avoid mistakes that may doom an estate plan to failure.
Americans Are Putting Off Planning
The numbers suggest that Americans are more likely to complete the following unpleasant tasks than they are to create an estate plan:
- Going to the dentist. Roughly 71 percent of US adults make an annual trip to the dentist’s chair compared to approximately 24 percent of adults who have a will.
- Deep cleaning. Eighty percent of Americans take on major spring cleaning projects each year, making even tasks such as toilet scrubbing more popular than creating estate planning documents.
- Filing taxes. Although tax preparation is widely disliked, around 85 percent of federal taxes are paid voluntarily and on time.
- Visiting the DMV. Despite its reputation, approximately 87 percent of driving-age Americans maintain an active driver’s license.
What is it about estate planning that lends itself to inaction? It could be that the planning process forces us to think about uncomfortable topics such as our own mortality. However, the reasons people give are generally more practical. Procrastination remains the biggest obstacle, followed by common misconceptions about estate planning.
How Failing to Plan Is Planning to Fail
Delaying estate planning can make things more difficult later. Without your own instructions in place, state law and default procedures may determine what happens to your property and who makes decisions on your behalf.
The best time to plan is right now. Here is what your attorney wishes you knew about estate planning—and why it matters.
Do Not Wait for the Perfect Time to Plan
One of the most common estate planning mistakes is assuming that you need to reach a certain age, accumulate a certain amount of wealth, or feel fully prepared before creating a plan.
Assuming That Estate Planning Is Only for the Wealthy or Older Adults
Estate planning is not just about high-net-worth tax strategies. It is also about deciding what happens to your property, choosing who can handle your financial and legal affairs, and naming guardians for minor children.
If you own a home, have bank or retirement accounts, valuable possessions, or even beloved pets, you have reasons to create an estate plan.
Without one, state law may determine who receives your property, which may not reflect your wishes.
Waiting Until a Health Scare Forces the Issue
Many Americans say they would only create a will after a serious health event. Unfortunately, waiting until a crisis occurs may leave you without the mental capacity required to execute legal documents.
Creating powers of attorney, healthcare directives, and wills during a medical emergency places unnecessary stress on everyone involved and can even create legal challenges.
Do Not Assume That a Will Covers Everything
A will explains who receives certain property after death, but it does not control every asset.
Overlooking Beneficiary Designations
Retirement accounts, life insurance policies, and payable-on-death or transfer-on-death accounts generally pass according to the beneficiary listed on the account—not according to your will.
Ignoring Jointly Owned Property
Jointly owned property often transfers automatically to the surviving owner, regardless of what your will states.
Confusing a Will with a Comprehensive Estate Plan
A will only takes effect after death. A comprehensive estate plan also includes documents such as powers of attorney and healthcare directives that protect you during your lifetime if you become incapacitated.
Do Not Rely Too Heavily on DIY Estate Planning
Online templates and software can seem convenient, but they often fail to address state-specific laws, unique family situations, and more complex planning needs.
Using Generic Forms That Ignore State-Specific Laws
Estate planning laws vary by state. Generic documents may not satisfy your state’s legal requirements or accomplish your goals.
Creating Conflicting or Incomplete Documents
Self-prepared documents frequently conflict with existing beneficiary designations, ownership arrangements, or prior legal documents.
For example, creating a trust does not automatically place assets into that trust. Assets must be properly transferred, or the trust may have no authority over them.
Do Not Let Your Estate Plan Go Stale
Estate planning is not a one-time project. Your documents should evolve as your life changes.
Failing to Update After Major Life Transitions
Review your estate plan after major events such as:
- Births or deaths
- Divorce or remarriage
- Moving to another state
- Significant financial changes
Have the Hard Conversations
Family dynamics often create the greatest challenges in estate planning. Honest conversations during the planning process can prevent misunderstandings later.
Hiding Family Dynamics from Your Attorney
Your attorney can only address issues they know about. Sharing concerns involving blended families, estrangements, special needs, or difficult relationships helps create a more effective plan.
Choosing Representatives Based on Emotion Rather Than Fit
Naming an executor, trustee, or guardian simply because of birth order or family expectations can create unnecessary problems.
Your decision-makers should be chosen based on reliability, organization, judgment, and availability—not obligation.
Your estate plan does not have to be perfect to be beneficial. Starting now gives you more options and allows you to adjust your plan as your life changes.
