10 Common Estate Planning Mistakes to Avoid

By: Jenna Elliot, JD, LLM. Director, Estate Planning, Mercer Advisors

A crucial mistake you can make with your estate plan is not having one at all. More than two-thirds of Americans are making this critical error by not having a will. Even if you think you don’t have enough assets, creating a comprehensive estate plan is about more than just money and property — it’s about ensuring you have control over important decisions that can affect you and your family if you become incapacitated, as well as after you pass away. Otherwise, the state where you reside or people you may not trust could end up making those decisions.

Here’s a list of 10 common estate planning mistakes to avoid:

1. Not updating your plan: Life events, tax law changes and incapacity documents older than four years might require a reevaluation and revision of your estate plan. Update your incapacity documents, trust(s), will and beneficiary designations for retirement accounts, life insurance and annuities to ensure they still align with your wishes.

2. Neglecting to name beneficiaries: Ensure all your accounts and policies have designated beneficiaries and name contingent beneficiaries. Beneficiaries must empty inherited retirement accounts within 10 years of the account owner’s death, which can have significant tax implications. Consider establishing a retirement trust to preserve the 10-year distribution schedule and potentially build in asset protections for your beneficiaries from creditors. An irrevocable life insurance trust (ILIT) can cover estate taxes that may be owed by the beneficiary and save you taxes.

3. Choosing the wrong trustee: The trustee manages, administers and distributes the assets in your trust per its instructions. Consider the complexity of your estate plan, the types of assets you have and your personal preferences when choosing a trustee. Know a trustee’s responsibilities before choosing one.

4. Overlooking digital assets: Specify in your will or estate plan who can access and manage your digital assets. Compile a list of all your digital properties, familiarize yourself with each account’s user agreement and determine who you want to access or own the accounts after you pass.

5. Not planning for disability and long-term care: Include documents in your estate plan that address long-term care needs, such as a living will and a healthcare power of attorney document. Submitting HIPAA forms to your medical providers will give your designated loved ones access to information that can help them make health care decisions for you if you become incapacitated.

6. Ignoring tax implications: Understand estate and inheritance tax laws. Inheritance tax is paid by the inheritor if imposed by the decedent’s state, while estate taxes are paid to the federal government by the estate. Advanced planning tools such as the generation-skipping trust (GST) can help minimize estate taxes.

7. Failing to communicate your plan: Discussing end-of-life preparations and finances can be emotional and difficult but having discussions sooner rather than later can help mitigate unnecessary issues upon your passing. Use a Family Records Workbook to organize the information your family or heirs could need to fulfill your wishes.

8. Improperly structuring or funding trusts: Choose the trust structure that best matches your estate planning desires. Transfer your assets into the trust, including accounts, property and policies, or the trust won’t be effective. Properly title all the assets you intend to be part of the trust or designate your trust as the beneficiary of your accounts.

9. Not paying attention to location: The laws and tax implications of the country or state where you reside will be applied to your estate. Understand estate and inheritance taxes by state and how your location could affect your heirs.

10. Disregarding flexibility in trusts: An irrevocable trust may require court involvement to make changes and may remove your control from the assets you place in the trust. Consider the potential benefits and drawbacks of an irrevocable trust based on your wealth and needs.

Need assistance?

The common mistakes noted above indicate some of the complexities of estate planning. If you are concerned about accurately taking care of your heirs according to your wishes, the right professionals can help.

At Mercer Advisors, our comprehensive wealth management solution includes estate planning, financial planning, investment management, tax planning and insurance solutions. To help avoid these 10 common estate planning mistakes and get guidance on how all your finances can work better when they work together, visit merceradvisors.com.

1. “2024 Wills and Estate Planning Study,” Caring.com, July 30, 2024.

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. The information is believed to be accurate, but is not guaranteed or warranted by Mercer Advisors. Content, research, tools, and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.

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