Estate Planning

4 Estate Planning Mistakes to Avoid

By Jason Newcomer

June 15, 2021

4 Estate Planning Mistakes to Avoid


Key Points – 4 Estate Planning Mistakes to Avoid

  • The importance of having an estate plan
  • Four estate planning mistakes to avoid
  • 7 minute read

4 Estate Planning Mistakes to Avoid

Of all of the components of a well-designed financial plan, estate planning might be the one that people like to think about the least. After all, you’re confronting and dealing with your own mortality. 

Eventually, we will all die. Most of us will experience some illness that requires some form of ongoing care. And when we are gone, we’ll leave someone to deal with our estates. 

I’ll admit that this isn’t as fun to discuss as planning a big family vacation or deciding which charitable organizations to donate to this year. It is, however, a critically important part of a financial plan for several reasons. 

When done improperly (or not done at all), a time for grieving, healing, and celebrating the life of a loved one can become a stressful situation. It can tear families and friends apart forever and none of us would wish that on the ones we love.

Let’s take a few minutes to review some of the common estate planning mistakes and learn how we can avoid them. 

Estate Planning Mistake to Avoid #1: Improper Planning or Failing to Plan At All 

The legal term for dying without a will is dying “intestate.” When someone dies intestate, it’s up to state law to determine how to divide their assets.

Many of these situations will involve a probate court proceeding to determine an executor. In most situations, a spouse and/or blood relatives such as children, siblings, or even cousins will be left to inherit and divide any assets. 

Sometimes, the state will determine that the estate should be divided differently from what an individual wants to happen. This is why proper planning is so important.

The term “estate planning” can conjure up visions of courts and attorneys and the fees that go along with them. Instead, we should think of estate planning as a process that doesn’t necessarily need to involve shelling out large sums of money. And, it certainly isn’t only something of concern for the wealthy.

Estate Planning Mistake to Avoid #2: Out Of Date Information 

Even if you’ve done some estate planning in the past, there may be circumstances that lead to an update to your old plan becoming necessary. A common example is during a marriage. With all the event planning and coordination, and the combining of finances, it can be easy to forget to update your beneficiaries on your bank accounts, investments, or insurance policies. 

This becomes an even bigger issue when dealing with a second marriage. Everyone has heard horror stories of the person who remarried then died but left their ex-spouse on as the sole beneficiary of their estate due to an oversight. 

One can mitigate such a tragic situation by remembering that estate planning is an ongoing process, not a one-and-done situation. It’s a good idea to review your beneficiaries on all of your accounts and titled assets (vehicles, watercraft, houses, etc.) at least every two to three years. 

It’s also a good idea to review your will or trust to make sure the people referenced in those documents are still the ideal candidates for the roles you are designating. For example, if your older brother is the executor of your will. If in the time since drafting the will, you’ve grown apart, or he’s developed some serious health concerns, you may want to consider designating someone else as your executor. Or at least adding on a backup person. 

Estate Planning Mistake to Avoid #3: Improper Healthcare Planning  

Part of a complete estate plan should involve planning what happens when you get sick and can’t make decisions at the time. There are countless stories and examples of what happens when healthcare planning isn’t done in advance. 

Perhaps one of the more widely publicized examples of this was the tragic story of Terri Schiavo. In 1990 she experienced a heart attack that led to a lack of oxygen getting to her brain and was in a coma for more than two months. Her physicians had determined she was unresponsive and unlikely to recover from her vegetative state. 

Unfortunately, she had not done any estate planning, didn’t have a living will, nor had she designated a health care power of attorney. She remained in this vegetative state for 15 years, while her case became hotly debated in the national news. 

Her husband argued that she would not have wanted to be left in this state, while her parents took the opposite view. What should have been a very private, personal matter became a daily headline on the evening news. 

You can avoid situations like this by taking the time to choose someone to act as your health care power of attorney. Then you can make your wishes known about things like life support and medical treatments. When you are unable to make those decisions, they can make them for you according to your plans.

Estate Planning Mistake to Avoid #4: Relying Too Heavily On Your Beneficiaries 

We want to trust that our loved ones and beneficiaries will make wise decisions with any assets we leave them. However, when emotions are running high, people are not always in the right mindset to make sound financial decisions. 

One of the best things you can do for your beneficiaries is taking a lot of the decision-making out of their hands and make those decisions for them. For example, if you want to make sure each of your children receives an equal share of your assets, make sure you designate your wishes on a beneficiary form rather than a verbal arrangement with your children. 

You might think that leaving the assets to the most responsible of your children to then dole out to their siblings would be sufficient, but far too many things can go wrong with this approach. With things like your personal effects, make sure you document how you want those to be distributed so that your executor or children aren’t left making those decisions. 

Your Estate Plan is Too Important to Leave to the Courts

Far too much is at stake with your finances and family relationships to avoid the process of estate planning. As mentioned earlier, this doesn’t have to be an expensive, time-consuming endeavor. It starts with a conversation about your wishes, concerns, and goals. 

From there, a plan starts to form. Who do you trust to make medical or financial decisions on your behalf if you cannot make them for yourself? Who do you wish to leave your assets, what lessons or values do you wish to pass on to them? 

These aren’t questions that necessarily need to be asked by a financial planner or attorney, but questions to discuss between you and a spouse, family member, or friend. However, if you want to have that discussion with one of our financial planners or attorneys, get in touch with us here.

Jason Newcomer, CFP®, AIF®, EA


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The views expressed represent the opinion of Barber Financial Group an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Barber Financial Group does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.