Estate planning is one of those things that most of us don’t really think about until something big happens in our lives. If you’re reading this now, I’d bet there’s a pretty good chance you’re in this boat.

The truth is it’s never too soon to get started on estate planning. Yet, because we don’t talk about the subject openly as a society, there are a lot of unfortunate misconceptions about estate planning…which lead to major errors.

If you die without a will, your assets will be left in the control of the state and dispensed according to their formula. Pretty scary, right?

As an Asheville estate planning attorney myself, I would much rather you avoid pitfalls than have someone like me break bad news to your loved ones at a difficult time, so I thought I’d share the most common estate planning mistakes I’ve seen, along with steps you can take to get a strong estate plan in place.

MISTAKE #1 (AND THE #1 MISTAKE): NOT HAVING AN ESTATE PLAN

Estate planning may not be the first thing on your list of “ways I want to spend my free time.” I get it. But the truth is that we don’t know how long we’ll be around. Every day you put off estate planning, you’re taking a risk that your loved ones will be left dealing with unanswered questions about your wishes for funeral, burial, etc. Moreover, if you die without a will, your assets will be left in the control of the state and dispensed according to state intestacy laws. In other words, your assets will be split equally among your surviving relatives with a pre-determined formula, no matter what. Your horrible half-brother could get everything, and your best friend of 30 years whom you love dearly could get nothing—sounds like a potential nightmare, right?

How to avoid it: Meet with an estate planning attorney, the sooner the better. For most people, an estate plan including a will/trust, living will, durable power of attorney, and healthcare directive can be drawn up in less than a day.

MISTAKE #2: RELYING ON A DIY ESTATE PLAN

With cheap DIY estate planning kits online, it can be tempting to forgo the attorney to try and save a few bucks. Proceed at your own risk. “One size fits all” document templates don’t really fit anyone perfectly, and DIY plans are often full of holes that place undue financial and emotional stress on surviving loved ones.

DIY plans don’t ask the right questions and are often full of holes, leaving surviving family to hire an attorney to sort out the mess.

More often than not, the family ends up having to hire an attorney to help them sort out the mess—which is usually much more expensive than having a qualified attorney draw up an estate plan to begin with.

How to avoid it: Remember, you get what you pay for. If you insist upon drafting your own will, trust, or other important parts of your estate plan, have an attorney look it over. But, you really are better off working with a qualified estate planning attorney.

MISTAKE #3: NOT UPDATING YOUR ESTATE PLAN

Think of how much your life has changed in just the last ten years. Perhaps you now have kids, you’ve gotten divorced and remarried, or you finally bought that dreamy camper van and are hitting the road indefinitely. Chances are you’d like your estate to be distributed a little differently than you did when you were living some past version of your life.

How to avoid it: Contact your attorney any time you have a major life, relationship, or property change to discuss how your estate plan might change. It’s also a good idea to meet every few years regardless, as state and federal tax and inheritance laws are always changing.

MISTAKE #4: LEAVING ASSETS TO DIRECTLY TO MINORS (WITHOUT A TRUST)

Of course you want your kids to receive a healthy sum—but think about how you handled money when you were 18 (the age when inheritance is required to be turned over to a minor if not left in a trust). Most of us probably wouldn’t have made the wisest decisions if presented with lots of money as a teenager. Moreover, without a trust, a minor’s inheritance will be assigned to a court-ordered guardian, who may not be the person you want to handle their money.

The best way to minimize the tax consequences of your estate on its beneficiaries is to let an experienced attorney help you plan your estate.

How to avoid it: Leave money and property that you intend to go to a minor in a continuing trust. That way, you ensure the inheritance is spent well (and doesn’t become a new sports car). With a trust, you can arrange for the funds to be used towards educational expenses and the like, as well as control at what age the beneficiary has full access to the money.

MISTAKE #5: NOT TAKING ADVANTAGE OF THE AVAILABLE TAX EXEMPTIONS

You do not have to be a multi-millionaire to lower the eventual tax burden on your estate. Currently, you and your spouse (if applicable) can each give up to $15,000 per recipient tax-free each year, without it affecting the lifetime gift exemption. This can be a smart way to move portions of money out of your estate without incurring taxes.

How to avoid it: Set up a gift schedule to help you lower your estate without putting undue hardship on yourself (or setting up unwanted expectations among your giftees). Also, consider that there are many confusing and convoluted tax laws tied to estates, property transfers, retirement accounts, and insurance policies. The best way to minimize the tax consequences of your estate on its beneficiaries is to let an experienced attorney help you plan your estate.

MISTAKE #6: FORGETTING TO UPDATE YOUR BENEFICIARIES

Do you know what happens if you don’t assign a contingent beneficiary to your retirement accounts or insurance policies before you die? That money will default to your estate, which could then enter probate or go straight to creditors, rather than to the people you want to receive those funds. Additionally, if you forget to update your IRA beneficiaries following divorce or remarriage, your ex will still get that money—IRAs do not automatically update to benefit a current spouse.

How to avoid it: Review your policies and accounts after major life changes, and every few years, to double check that you have the appropriate beneficiaries set up. Additionally, make sure your will is up to date and coordinated with your beneficiary designations to avoid unwelcome surprises after your death—a will cannot make up for a drained bank account or override a designated beneficiary on your life insurance policy.

MISTAKE #7: LEAVING SPECIFIC ASSETS TO SPECIFIC INDIVIDUALS

In an effort to be fair and thoughtful, many people want to leave specific assets of similar value to each of their loved ones; e.g., they leave their house to their son with three kids, they put their sister as the co-signer on their savings account, and they will their boat to their sailing buddy.

This all seems innocent enough, but what is fair and equal at the time you draw your estate plan may not be so after your death: the house may have tripled in value, you may have forgotten to fund your savings account in the last 20 years, and the catamaran was severely damaged in a hurricane.

Not every example is this extreme, but naming specific assets is often a recipe for trouble and disappointment. At best, the beneficiary may end up dealing with an asset they don’t really want, and at worst, you may accidentally disinherit someone you love.

How to avoid it: Instead of naming specific assets, have an experienced estate planning attorney help you set up a trust where you can leave all of your assets, and dictate how they are divided and to whom.

HAVE QUESTIONS? EXHAUSTED JUST READING THIS? WE’RE HERE TO HELP.

The truth is, the best way to avoid estate planning mistakes is to work with an experienced attorney whom you can trust to work in your best interest. Our Asheville attorneys and staff at Craig Associates strive to give our clients the tools and guidance they need to make the best decisions for their families. If you are ready to set up your very first estate plan, or you just have a question for us, we invite you to reach out to us by phone or online.