Estate planning mistakes can upend your best efforts to protect your family's finances after your death. Everyone can benefit from learning the basics of estate planning, a process that entails getting your financial affairs in order so that your assets and possessions get passed on to the people or organizations you want to inherit them.
Having a comprehensive estate plan in 2025 will also spare your loved ones the pain and expense of determining how to allocate your money and property while they’re grieving your loss.
What is an estate plan?
An estate plan consists of several legal documents that lay out what happens to your assets and liabilities when you die or become incapacitated. At the very least, it will consist of a last will and testament, a living trust, an advance directive and power of attorney.
While you may feel an estate plan is unnecessary because you lack sufficient assets to pass along to your family, it isn't all about the money. It also entails ensuring your wishes about future medical care are understood. An estate plan can also drastically reduce the potential for family disagreements.
One of the biggest disadvantages to not developing an estate plan while you’re healthy and of sound mind is that you remove the ability to make hard decisions on your own. In this case, the court may determine how to distribute your assets, or worse, your entire estate can go to the state. That's why it's so critically important to make smart estate planning moves now, and why everyone, from millionaires to people just starting out, should have an estate plan.
Common estate planning mistakes to avoid
Creating an estate plan can be complex and emotionally challenging, which may explain why fewer than one in three Americans have a will or any estate planning documents, according to Caring.com’s latest Wills and Estate Planning survey.
Around a quarter of those surveyed who were without a will said they never plan on creating one, and over 40% of respondents said they would not execute a will until they faced a major health crisis. But, you can never make an estate plan too soon, for you never know how soon it will be too late.
Here are ten common estate planning mistakes to avoid.
1. Procrastinating
You certainly don’t want to be without an estate plan if, perish the thought, you become incapacitated because of a health emergency, such as a stroke or heart attack. Yet 43% of Americans without a will said they plan on waiting for a medical diagnosis to create a will, the Caring.com survey found.
This wait-and-see strategy raises two serious problems. First, your loved ones may face lengthy legal proceedings to access your estate if you die without a will. Second, without an advance directive, a section of an estate plan that dictates your medical preferences if you are incapacitated, your family won't know what kind of care you prefer.
2. Creating an estate plan on your own
Estate planning documents that are incomplete or contain errors can cause complications when you pass. Consider hiring an estate attorney who understands the legalese to help you craft a comprehensive estate plan.
Generally, an estate lawyer will charge between $1,500 and $5,650 for an estate plan, depending on the complexity of the client’s assets, according to Greiner Law Corp. in 2024. However, many estate attorneys offer free initial consultations or charge a flat fee for, say, drawing up a will. You can find an estate attorney in your area using an online directory, such as Justia, Legal Match, or the American College of Trust and Estate Counsel (ACTEC).
For more, read about ways to save money on estate planning.
3. Leaving loved ones uninformed
Sharing your estate plan with your family and heirs can help prevent confusion, conflict, and unnecessary stress. Although the conversation can be difficult as you face your own mortality, it is important to sit down with the relevant people in your life and have an open conversation about your intentions while you still can.
4. Keeping estate planning documents locked up in a safe or safe deposit box
Estate documents kept tucked away in a safety deposit box or a safe in your home might be difficult to access. Instead, provide copies of your estate plan to your appointed executor or trustee, a trusted family member, and your estate lawyer. And make sure family members have contact information for each of these people.
5. Missing key documents
An incomplete estate plan can create a lot of problems — and the potential for disputes among heirs when you pass. Make sure your plan includes these essential documents:
- Last will and testament. Often simply referred to as a "will," a last will and testament outlines your final wishes and instructions for the distribution of your assets and the management of your affairs after you pass.
- Beneficiary designations. Make sure to assign beneficiaries for bank accounts, 401(k) and IRA accounts, pensions, and life insurance policies.
- Durable power of attorney for medical care. This appoints a person to make medical decisions for you, on your behalf, should you become mentally or physically incapable of making them yourself. It often includes an advanced healthcare directive, which instructs your family and doctors to use or not to use life support.
- Durable financial power of attorney. This assigns an individual to manage your assets if you become incapacitated.
- Funeral instructions. Specify whether you’d like a burial or a cremation and the type of funeral service you want.
- Proof of identity. Gather your social security card, birth certificate, marriage and/or divorce certificate, and any prenuptial agreements.
- Deeds or loans for large assets. Collect this paperwork for homes, boats, and other big assets.
- A living trust or a revocable trust. A living trust is not required for estate planning but may help your heirs with a smoother transfer of assets after you die.
6. Overlooking digital assets
Many people forget to account for their digital assets, such as cryptocurrencies, social media accounts, cloud storage, and digital files when creating an estate plan. Consider assigning a digital fiduciary in your estate plan who has the right to access your digital assets when you pass.
7. Forgetting about final arrangements
No one eagerly jumps in to plan their own funerals or final arrangements. If you're young, you think you'll live forever; if you're older, the inevitable is too close for comfort. But, making final arrangements, setting aside money for the funeral, choosing a burial plot, picking out songs, and deciding on a coffin or other vessel makes it easier for those you left behind, who are probably mourning the loss.
Besides, funerals can be expensive. In 2024, the average funeral costs just over $8,000, including a burial service and viewing, depending on where you live. If you add a vault, you may pay close to $10,000. The median cremation cost is $6,280, according to the National Funeral Directors Association.
8. Forgetting about taxes
Estate tax liability can put a dent in any plan. But unless your estate is very large — $13,610,000 in 2024 and $13,990,000 in 2025, you may not have to because your estate will not be taxed at the federal level. Keep in mind, unless an extension is put into place, the law may revert back to the former $5 million exemption limit after 2025.
Also, your state may or may not have a state estate tax, so check this out before you write up your will or trust. Over thirty states have no death taxes and six states have significant death taxes.
9. Not updating your plan
Don't worry about updating your estate plan every month, or even every year. However, reviewing and revising your estate plan after major life events — a marriage, divorce, birth of children or grandchildren, or the acquisition of new assets — can prevent unwanted consequences, such as your assets being passed to unintended beneficiaries.
Because your assets may change, as well as your personal options, beliefs and relationships, it’s still a good idea to go over your estate plan about every three to five years.
10. Appointing the wrong executor or trustee
No matter how much time and effort you put into planning your estate, your wishes may backfire if the wrong executor is chosen. Choosing someone who may have a conflict of interest can lead to problems when it comes time for them to administer your estate. Select an individual (or individuals) who are unbiased, and get their permission before you assign them as an executor or trustee.
