Common Estate Planning Mistakes

By: Nathan Hymiller of Beacon Financial Strategies
Serving: Raleigh Financial Advisor serving, Durham, Cary, Chapel Hill, RTP, Garner, Wilson, Pittsboro, Knightdale, Apex, Morrisville, and all of the Triangle Area.
Tags: estate planning, taxes, real estate

An effective estate plan can ensure that assets pass directly to the intended heirs according to the deceased wishes and with the least amount of cost.  Without a properly executed estate plan, heirs can be left with a big mess and lots of hassle.  Here are a number of estate planning mistakes that, if avoided, can ensure an efficient distribution of assets at death:

Not having a will.  Unfortunately, many Americans do not have a will.  For those who die intestate, without having a will, the decedent's state of residence has laws that dictate how assets should be distributed.  In addition to asset distribution, intestacy laws and the courts help determine who would be the most suitable guardian for minor children.  For most families, a court appointed solution for the assignment of guardians and the distribution of assets is not the ideal situation, especially in a time of grief. An Outdated Estate Plan.  All estate planning decisions and strategies need to be periodically reassessed.  Not only do estate laws change, but often times changes within a family unit may also necessitate revisions to an estate plan.  Deaths, births, and marriages can alter the family dynamics in a way that will require modifications to wills, trusts, powers of attorney, or health care powers.  Periodically reviewing these documents can ensure an effective estate plan that reflects the individual’s wishes.

Improperly Titled Assets.  Property can be titled in a number of different ways including an individuals name, joint name, or in the name of a trust.  As real estate and other financial assets are accumulated and/or sold, it may be necessary to review how the titling of certain assets impact the distribution of an estate.  In some situations, it may make sense to have assets placed in a trust.  It is imperative that changes be made to deeds (in the case of real estate) or brokerage accounts, etc. to reflect the intention that these assets be held in a trust.  Having an attorney draft the trust document is step one, but funding the trust and re-titling assets is the more important element.

Unnecessarily Exposing Assets to Probate.  While the probate process of transferring estate property is not an entirely burdensome process, it is a public and potentially costly process that can be limited with proper planning.  Appropriate titling of assets, the use of trusts, payment on death accounts, and designating beneficiaries on IRAs and life insurance policies are all effective tools that can be utilized to help avoid or minimize probate.

Failing to Update Beneficiary Forms.  Once retirement accounts and life insurance policies are established, many people never reconsider their beneficiary designations again.  It is important to periodically confirm that beneficiary designations coordinate with the disposition of assets that are addressed in other estate documents.

Being Disorganized.  Estate documents, asset inventories, account numbers and a list of advisor's with their contact information should be available and in a place where someone will find them.  Reducing the number of brokerage, bank, and mutual fund accounts, along with depositing all stock certificates in brokerage accounts are easy ways to help reduce the burden on the executor of your estate.  Disorganization can generate months of hassle as well as unnecessary attorney or advisor fees.

In addition to making sure that the distribution of your assets is in line with your objectives, taking a proactive approach when planning your estate can save your grieving family a significant amount of time and hassle.

About the Author: Beacon Financial Strategies is a fee-only financial planning, tax and investment advisory firm. Beacon works with clients on a consultative and objective basis to help them achieve their personal financial goals. Beacon professionals specialize in the following areas of financial planning: retirement feasibility planning, estate planning and coordination, tax minimization strategies, and wealth management services. For more information, visit Beacon’s Web site at
Article Published: 06/29/2009