How Can You Avoid Common Estate Planning Mistakes?
April 16, 2025
Estate planning is a critical part of managing your assets and making sure that your wishes are respected after you pass away.
It can also help reduce the stress and confusion that your loved ones might experience during a difficult time.
Unfortunately, many people overlook estate planning or make mistakes when creating their plans, which can lead to complications such as probate, family disputes, and unnecessary taxes. These mistakes are often preventable with a little guidance and foresight.
The Law Office of Blake P. Lipman is here to help individuals in Farmington Hills, Michigan, and the surrounding areas develop comprehensive estate plans while avoiding common pitfalls like those outlined below.
Failing to Have an Estate Plan
One of the most significant mistakes you can make is not having any estate plan at all. It's easy to assume that you don’t need one or that your assets will automatically go to the right people. However, this is a dangerous misconception. Without a formal estate plan, the state will decide how your assets are distributed, which might not align with your wishes.
Many people believe estate planning is only for the ultra-wealthy, but that's simply not true. Estate planning is for everyone, regardless of the size of your estate. Everyone needs to plan for incapacity, protect their loved ones, and make sure that their property is distributed according to their wishes.
How to Avoid This Mistake
Work with an estate planning attorney to create a will, trust, and other necessary documents. Make sure your estate plan includes the appointment of a guardian for minor children (if applicable) and designates an executor or trustee to handle your estate. By having a plan in place, you can prevent the state from deciding who gets your assets.
Not Updating Your Estate Plan
Life changes, and so should your estate plan. Various life events should trigger an update to your estate plan, including:
Marriage
Divorce
The birth of a child
The acquisition of new assets
Failing to update your plan can lead to unintended consequences, like estranged family members receiving assets or a child being left out.
How to Avoid This Mistake
Regularly review your estate plan, especially after major life events. Make sure beneficiaries are updated to reflect your current wishes. For example, if you've recently married, make sure that your new spouse is included in your will or trust. If you've had children, make sure they are properly named as beneficiaries or heirs.
Forgetting to Plan for Incapacity
While many people focus on what will happen after their death, it’s equally important to plan for the possibility of becoming incapacitated.
If you’re unable to make decisions for yourself due to illness, injury, or mental decline, someone will need to step in to manage your health care and finances. If you don’t have the appropriate documents in place, this can lead to confusion, delays, and even court intervention.
How to Avoid This Mistake
Make sure your estate plan includes powers of attorney for both healthcare and financial decisions. These documents allow you to designate someone to act on your behalf if you’re incapacitated. A living will, which outlines your wishes for end-of-life care, should also be part of your planning.
Not Understanding Probate
Many people are concerned about probate because it can be a lengthy and costly process.
Probate is the legal process by which a deceased person's estate is administered, including validating their will, paying debts, and distributing assets. If your estate goes through probate, it can tie up assets for months or even years, and the process can incur significant costs in attorney and court fees.
While probate is inevitable in some cases, there are strategies to avoid or minimize it.
How to Avoid This Mistake
Consider creating a revocable living trust. Assets placed in a trust don’t go through probate, which can save your family both time and money. A living trust allows for the seamless transfer of assets to your beneficiaries without the court’s involvement. Make sure that all of your significant assets are transferred into the trust to avoid them being subject to probate.
Additionally, joint ownership of property with the right of survivorship can help avoid probate. For example, if you own a home with your spouse, the property may automatically transfer to them upon your death, bypassing probate.
Not Considering Estate Taxes
While Florida doesn’t impose a state estate tax, there may still be federal estate tax concerns. The federal estate tax exemption is currently high, but it can change, and your estate may be subject to taxes if it exceeds the exemption amount.
Failing to plan for estate taxes can result in your beneficiaries receiving less than you intended, or the need for your estate to sell assets to cover the tax bill.
How to Avoid This Mistake
If your estate exceeds the federal exemption threshold, it’s important to develop a plan to minimize taxes. The following strategies can help reduce the size of your taxable estate:
Making gifts during your lifetime
Utilizing charitable donations
An estate planning attorney can help you understand the most effective ways to reduce your estate’s exposure to taxes.
Choosing the Wrong Executor or Trustee
Your estate’s executor or trustee is responsible for managing your estate after your death. They must carry out your wishes, handle debts and taxes, and make sure assets are distributed properly.
Selecting the wrong person for this role can cause delays, mismanagement, or family conflict. It’s important to choose someone who is responsible, organized, and capable of handling the intricacies of your estate.
How to Avoid This Mistake
Choose an executor or trustee carefully. This person should be someone you trust, who has the skills and temperament necessary for managing financial matters. If you don’t have someone in mind, you can appoint a professional, such as an attorney or financial advisor, to serve as the executor or trustee.
Overlooking Digital Assets
It’s easy to overlook your digital assets when creating an estate plan. Digital assets can include online accounts, social media profiles, cryptocurrency holdings, and digital photos or documents. Without proper instructions, your loved ones may struggle to access or manage these assets after your death.
How to Avoid This Mistake
Make sure to include your digital assets in your estate plan. Provide clear instructions on how to access your accounts and designate someone to manage them. Consider including a password manager or a written list of your digital assets in a secure location. Your family should know how to access this information when necessary.
Not Communicating Your Plan to Family
Even the most well-drafted estate plan can lead to conflict if your family doesn’t understand your wishes. When a loved one passes away, emotions can run high, and disputes can arise, especially if family members are left in the dark about your plans.
How to Avoid This Mistake
Have open and honest conversations with your family about your estate plan. While you may not need to share every detail, it’s important to explain the general structure of your plan and your reasoning behind certain decisions. This can help prevent misunderstandings and reduce the chances of family disputes down the road.
Failing to Account for Special Circumstances
Certain family situations require special consideration.
For example, if you have a child with special needs, you may need to establish a special needs trust to make sure they receive the necessary care without jeopardizing their eligibility for government benefits. Similarly, if you have a family business, you may need to create a succession plan to make sure that the business is passed on smoothly.
How to Avoid This Mistake
Account for any special circumstances in your estate plan. Work with an estate planning attorney who can guide you through creating the right provisions for your unique situation. Whether it’s a special needs trust, a business succession plan, or another strategy, these considerations are crucial for protecting your loved ones.
Contact an Estate Planning Attorney Today
If you’re concerned about the potential for probate or have any other questions about how to plan for the future, the Law Office of Blake P. Lipman can help.
Based in Farmington Hills, Michigan, the firm serves the Detroit Metropolitan Area and the Tri-County Area, including Oakland, Wayne, and Macomb. Contact Attorney Lipman today for experienced assistance with every step of the estate planning process.