7 Estate Planning Mistakes

Mar 16, 2018 / Amanda Chase, Horsesmouth Assistant Editor

Experienced estate planners see a high percentage of clients with recurring mistakes. They know if a client has never seen an estate planner or hasn’t had a plan revised within the last three years, the plan is likely to have at least one of these costly mistakes. (Remember, even if someone hasn’t seen an estate planner, he has an estate plan, and it’s probably not a good one.) Bob Carlson, editor of Retirement Watch, has a seven-part series on Forbes about estate planning mistakes that are committed frequently and can be very damaging to your clients’ goals and loved ones.

Mistake #1: Relying only on a will – A complete estate plan includes other key pieces such as power of attorney, medical directive(s), trusts, and more.

Mistake #2: Expecting too much from a power of attorney – Rules regarding POAs have grown more complicated in the past years, so ask each financial institution what its requirements are, consolidate your accounts, act early, and establish relationships.

Mistake #3: Not avoiding probate – Probate can be both time-consuming and expensive, and details vary from state to state. Consider your potential cost and privacy preferences before deciding on a course.

Mistake #4: Not making full use of a living trust – Most people who have revocable living trusts don’t reap the advantages, making mistakes which waste legal fees and keep heirs from enjoying the benefits.

Mistake #5: Leaving assets outright to adult children – Reaching a particular age doesn’t mean someone is financially sophisticated. Consider a trust when you’re concerned an adult child won’t focus on the long term.

Mistake #6: Losing the portability of a spouse’s unused exemption – Executors and surviving spouses need to know that an estate tax return should be filed, even when not required, to transfer the unused exemption amount to the surviving spouse. It isn’t automatic.

Mistake #7: Leaving a messy estate – This includes both the physical “stuff” and legal/financial matters. Organize and streamline your affairs to make it as easy as possible for your heirs.

To read the full series, click here.


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