Common Estate Planning Mistakes and How to Avoid Them
Estate planning is the process of making arrangements for the management and distribution of your assets after death or in the event of incapacitation. It involves preparing legal documents like wills, trusts, healthcare directives, and powers of attorney to reflect your wishes. For Missouri residents, creating a detailed estate plan can help protect loved ones, manage property efficiently, and avoid legal hurdles.
At the Foulk Law Firm LLC, we serve clients in St. Louis, Missouri, St. Charles, and Jefferson County in Missouri, and throughout Madison, Saint Clair, and Monroe County in Illinois. Our estate planning firm helps you understand your legal options and make informed decisions.
Mistakes in this area can lead to unnecessary expenses, delays, and conflicts. Recognizing common missteps is the first step toward building a solid plan.
Mistakes With Wills and Trusts
A will is a legal document that outlines how a person’s assets will be distributed upon death. It can name guardians for minor children and specify individual bequests. Without a valid will, the state determines how assets are divided, often leading to unintended outcomes.
A trust, on the other hand, is a legal structure that holds assets on behalf of beneficiaries. It allows for more control over when and how assets are distributed. Trusts can also help reduce probate involvement and offer privacy that wills don’t.
Mistakes involving wills and trusts are common. Some draft these documents without legal help, resulting in vague or conflicting language. Others forget to update them after major life changes like marriage, divorce, or a child’s birth. An estate planning attorney can help Missouri residents confirm their documents remain valid and effective.
Errors in Beneficiary Designations
Certain assets, such as life insurance policies, retirement accounts, and payable-on-death bank accounts, pass directly to named beneficiaries and aren’t controlled by a will. It’s a mistake to overlook these designations or assume that a will overrides them.
A common error is failing to update beneficiary forms after life changes. For example, an ex-spouse may remain listed as a beneficiary long after a divorce, creating unintended consequences. Another issue is naming minor children as direct beneficiaries, which can lead to court-appointed guardianship of the funds.
Working with an estate planning attorney can help you identify all accounts with beneficiary designations and confirm they align with your overall estate plan.
Overlooking Powers of Attorney and Health Directives
Incapacity is a critical but often overlooked aspect of estate planning. A power of attorney allows someone to act on your behalf for financial or legal matters if you become unable to make decisions. A healthcare directive outlines your medical wishes and names someone to speak for you in medical situations.
A common mistake is failing to create these documents or choosing individuals without fully considering their ability to handle responsibilities. Without them, loved ones may need to go to court to make decisions for you, causing unnecessary delays.
We can help draft durable and legally sound documents that reflect your preferences.
Missteps in Probate Avoidance
Probate is the legal process of validating a will and distributing assets to heirs and beneficiaries. While not inherently negative, it can be time-consuming and costly. Many people wish to avoid probate to simplify the transfer of their estate.
Common errors include assuming a will alone will avoid probate, not titling assets properly, or failing to use available planning tools like transfer-on-death deeds and revocable living trusts. In Missouri, tools exist to make probate avoidance achievable if set up correctly.
Tax-Related Mistakes
Estate taxes at the federal level are only triggered for estates above a specific value. However, tax implications can still arise at the state level or through income taxation of inherited retirement accounts. Misjudging these liabilities can create complications for heirs.
For example, inheriting a traditional IRA may result in unexpected income tax obligations. Another mistake is making large gifts without understanding potential gift tax consequences.
By working with a qualified estate planning attorney, Missouri residents can structure their estates to minimize tax burdens.
Asset Titling Errors
Improper asset titling is a frequent but avoidable issue. Assets titled solely in one spouse’s name, for instance, may not pass directly to the other spouse without going through probate. Joint ownership arrangements or beneficiary designations may be necessary to clarify transfer of ownership.
Other common titling errors include:
Not coordinating trust assets with trust documents
Holding real estate in a name that doesn’t reflect planning goals
Failing to use transfer-on-death designations when available
An estate planning attorney can help review how assets are titled to confirm they align with your estate planning strategy.
Outdated Plans
Estate plans aren’t static documents. Failing to update them after major life events can render them ineffective. Births, deaths, marriages, divorces, and changes in financial status should all prompt a review.
Another often-missed update involves changes in the law. For example, recent changes in federal tax law or Missouri estate planning statutes can significantly impact the long-term effectiveness and validity of a plan created years ago. Periodic reviews with an estate planning attorney help keep your plan current and responsive to legal and personal changes.
DIY Estate Planning
Online forms and generic templates have made do-it-yourself estate planning more accessible, but they often lack legal validity or fail to meet Missouri requirements. Individuals may miss key legal provisions or use unclear language, opening the door to disputes.
A poorly drafted will or trust can be contested, leading to extended court battles and additional costs. An estate planning attorney provides clarity and legal accuracy that these tools often lack.
Missouri residents benefit from personalized planning that reflects their goals and legal responsibilities.
Failure to Communicate With Loved Ones
Failing to communicate your estate plan to loved ones can result in confusion and conflict. While you aren’t required to disclose every detail, informing key individuals—such as the person you name as your power of attorney or healthcare proxy—helps them prepare for the role.
In some cases, a lack of communication can lead to disputes among heirs. They may feel surprised or left out, which can lead to legal challenges and damaged relationships.
Working with an estate planning attorney can help you plan how and when to have these conversations.
Choosing the Wrong Representative
Whether naming an executor for your will, a trustee for a trust, or a power of attorney, the decision requires careful thought. Choosing someone based solely on emotional ties or convenience may not be wise.
Your chosen representative should:
Be organized and responsible
Understand financial matters, or be willing to work with professionals
Be capable of acting fairly and following your instructions
An estate planning attorney can offer guidance when selecting individuals for these important roles.
Start Planning With Confidence
Estate planning mistakes can have lasting consequences, but many are avoidable with legal support and careful guidance. At the Foulk Law Firm LLC, we assist clients across St. Louis, St. Charles, and Jefferson County in Missouri, and throughout Madison, Saint Clair, and Monroe County in Illinois. Let our firm help you create a clear, customized plan that protects your future and your loved ones—contact us today to get started.