I'm a Financial Planner, and These are the 3 Estate Planning Mistakes I See People Make Over and Over

Elaine King

Did you know that 1,300 new step families (blended families) form every day? Over 50% of US families are remarried or recoupled. To make matters worse, more than half of American adults don’t have a will.

This is a recipe for disaster waiting to happen; future lawsuits, separated families, confused loved ones. 

 But first let’s define what estate planning means to the average person. It means having the following documents in place; a will, a trust, a durable power, a health care directive and guardianship documents for minor children.

As a certified financial planner I have worked with over 1,200 families and the top three mistakes I see are 1) not funding their estate planning vehicles such as their trust 2) neglecting to update those who will benefit from their assets 3) not educating those involved in their estate ahead of time.

Not Funding their Trust

Some plans I have seen done by top estate planning attorneys have accurately reflected the structures to minimize taxes and protect assets and beneficiaries. 

However in the real world (since attorneys are not responsible for the implementation of these documents) the assets will not pass on automatically as the documents state. Why?

For example, you have an investment account under your name and forgot to change it to the new Trust name – that asset will not pass the way the document says upon your death.  It is your homework to change the titles of your properties and assets.

Not Updating Your Beneficiaries

I have seen trusts, life insurance and retirement accounts being passed to individuals who are no longer alive, ex-spouses or children who are now older and don’t need (or can’t handle) a large sum of money. Or, on the contrary, now the children are responsible adults and people would prefer for their children to be in charge as opposed to an older friend or family member. 

Another mistake is no guardianship; for minor children it is best to name an emotional and financially stable guardian. It could even be two separate individuals, which is called a co-guardianship.

Not Educating nor Communicating the Estate Plan Ahead of Time

Trusts can be easily understood when the creator is alive but waiting to pass away for your family to decipher it adds too much pressure – I have observed.  I have had client’s relatives confused in my office asking if it was a trust issue, the fact the father left all assets in a family structure vs. outright, children asking me for the location of their inheritance and confused beneficiaries not understanding the dynamics of the distribution of the assets.  All this can easily be learned in an educational workshop focused on preparing heirs. It makes a huge difference when a spouse and beneficiaries understands where everything is and the thought process behind each title.

There are many other mistakes made on a daily basis, the most common; not having a will.  To increase the probability of a smooth estate planning process, you should ask your estate planning attorney and certified financial planner to work together.  Following the implementation, you should also host an educational workshop on the basics of estate planning with your family – you can go as broad in theory or specific with numbers as you would like to prepare them.  Planning ahead will lower the stress for you and your family.

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Elaine King - Family and Money Matters™ 2021