Common Estate Planning Mistakes and How to Avoid Them

No one wants to think about what things will be like when they’re gone but making end-of-life decisions while you’re still young and healthy is crucial. If you’re in the early estate planning stages, learn about the most common mistakes people make and how to avoid them.

Failing to Create a Will

Without a will, the State of California decides how your assets are distributed. This means your possessions might not end up with the people you intended. Even worse, the process can be drawn out and stressful for your family.

The solution is to draft a will, one of the foundational documents of estate planning. A will specifies how your property should be divided, who will care for your minor children, and what you want at your funeral. Working with an estate planning attorney ensures your will is legally sound and accurately reflects your wishes.

Not Naming Contingent Beneficiaries

Most people name primary beneficiaries for their retirement accounts, life insurance policies, and other assets. But what happens if your primary beneficiary passes away before you do, and you forget to update your estate plan? Without a contingent beneficiary, those assets might go into probate.

This is why you should always name a contingent beneficiary. It could be a family member, a friend, or a charity. Whatever the case, having a backup ensures your assets avoid probate and go to the person or organization you choose.

Choosing the Wrong Executor or Trustee

An executor or trustee is responsible for carrying out your estate plan. If this person is unreliable, disorganized, or lacks the necessary skills, it may lead to mismanagement, family conflicts, and delays.

The solution is to select someone you trust to handle the role responsibly. This person should be detail-oriented, impartial, and prepared to act in your estate’s best interest. Speak with the person you’re considering to ensure they’re willing and able to take on the responsibility. If you’re unsure who to choose, you can always appoint a bank or a trust company to serve as executor or trustee.

Not Setting Up a Power of Attorney

Life is unpredictable. If you become incapacitated without a power of attorney in place, decisions about your health, finances, and other matters might be left to someone the courts appoint—not necessarily someone you’d choose.

To avoid this, establish durable powers of attorney for healthcare and finances. These legal documents give a trusted individual the authority to make decisions on your behalf if you’re unable to do so. Consider naming a backup agent if your first choice is unavailable.

Overlooking Digital Assets

Think about all your online accounts: email, social media, banking, and more. If you don’t include digital assets in your estate plan, your loved ones might struggle to access or manage them.

The solution is to compile a list of your digital assets, including login credentials and management preferences. Work with an estate planning lawyer to incorporate these details into your plan.

Not Updating Your Estate Plan

Major life events should be reflected in your estate plan. If you fail to update it as your circumstances change, your plan may not reflect your current wishes when you pass away.

The solution is to make changes every time you or someone in your will gets married or divorced, acquires significant assets, passes away, or has a baby. Even if there haven’t been any big life changes, it’s wise to review your plan every three to five years with an estate planning attorney.

Ignoring Tax Implications

Estate taxes can eat away at the assets you’ve worked so hard to build. Poor planning may cause your beneficiaries to inherit less than you’d hoped.

Estate planning services help minimize tax burdens. Strategies might include setting up trusts, gifting assets during your lifetime, or donating to charity. An estate planning law firm can guide you through the best options for your circumstances.

Not Communicating Your Plan

Most children aren’t excited to hear about their parents’ estate plans. However, skipping these important conversations can lead to confusion, avoidable expenses, and undue stress for your loved ones.

Discuss your estate plan with your executor, trustees, and beneficiaries. Explain your decisions to avoid surprises and reduce conflicts. You don’t need to disclose every detail—just share enough to ensure your wishes are understood and respected.

Contact Us for a Consultation

At Bakerink, McCusker & Belden, we know estate planning can feel overwhelming. Fortunately, you don’t have to go it alone. Our estate planning law firm is here to guide you, drawing on over 35 years of experience and a reputation as one of the “Best of Tracy,” as published in the Tracy Press. Contact us today for a free, no-obligation consultation in the San Joaquin County area, and we’ll help you take the first steps toward a solid estate plan.