7 Estate Planning Mistakes That Could Destroy Your Legacy

You finally created a will. You think you're done with estate planning. You're not.

A will is just the beginning. Without proper planning, your legacy could be destroyed by taxes, family conflict, or legal complications—even with a will in place.

Here are the seven most common (and most expensive) estate planning mistakes, and how to avoid them.

Mistake 1: Assuming a Will is Enough

The problem: A will only covers assets that go through probate. Many assets don't.

What doesn't go through your will:

• Life insurance policies (go to named beneficiary)
• Retirement accounts (IRA, 401k - go to named beneficiary)
• Bank accounts with TOD/POD designations
• Joint ownership property (goes to surviving owner)
• Trusts

Real-world disaster: John left everything to his daughter Sarah in his will. But his retirement account (60% of his wealth) had his ex-wife listed as beneficiary—a designation he forgot to update after divorce. Sarah got 40%, ex-wife got 60%. John's wishes were ignored because the beneficiary designation overrules the will.

Solution:

• Review ALL beneficiary designations annually
• Update after major life events (marriage, divorce, birth, death)
• Ensure will and beneficiary designations align
• Keep a master list of all accounts and beneficiaries

Mistake 2: Not Planning for Incapacity

The problem: Your will only takes effect when you die. What happens if you're alive but unable to make decisions?

Without proper documents, your family must:

• Go to court to get guardianship/conservatorship
• Pay thousands in legal fees
• Wait months for court approval
• Have limited control even after approval

Solution - Create these documents NOW:

Durable Power of Attorney: Names someone to handle financial decisions if you're incapacitated

• Sign contracts
• Pay bills
• Manage investments
• File taxes

Healthcare Power of Attorney: Names someone to make medical decisions

• Treatment options
• Facility choices
• End-of-life decisions

Living Will (Advance Directive): Documents your wishes for end-of-life care

• Ventilators
• Feeding tubes
• DNR orders
• Organ donation

These are MORE IMPORTANT than a will because you're more likely to be incapacitated than to die unexpectedly.

Mistake 3: Choosing the Wrong Executor

The problem: You choose someone because you feel you "should," not because they're qualified.

Bad choices:

• The oldest child (when they're bad with money)
• The geographically closest (when they're overwhelmed)
• Multiple co-executors (when they don't get along)
• Someone with financial problems
• Someone who will play favorites

What an executor must do:

• File the will with court
• Inventory all assets
• Pay debts and taxes
• Manage estate during probate (often 6-18 months)
• Distribute assets per will
• Deal with family conflict

This is WORK. It takes time, organization, and emotional resilience.

Solution: Choose someone who is:

• Organized and responsible
• Good with paperwork
• Can handle family conflict
• Trustworthy
• Lives relatively nearby (or willing to travel)
• Younger than you
• Actually wants the job

Have a backup executor too. And ask them first before naming them.

Mistake 4: Not Updating Your Plan

The problem: You created an estate plan 15 years ago and never looked at it again.

What changes that invalidate old plans:

• Marriages and divorces
• Births and deaths
• Change in assets (bought house, started business, received inheritance)
• Beneficiaries' circumstances (disabled, divorced, bankrupt, drug problems)
• Tax law changes
• Moving to different state

Horrifying example: Margaret's will from 1998 left everything to her brother Tom. Tom died in 2005. She never updated. When Margaret died in 2023, her estate went to Tom's ex-wife (who he'd divorced in 2010) instead of to Margaret's son, because that's what the outdated will specified.

Solution:

• Review estate plan every 3-5 years MINIMUM
• Update after ANY major life event
• Keep document versions dated
• Store updated versions in multiple places
• Tell executor where to find current version

Mistake 5: Forgetting About Taxes

The problem: You think estate taxes only affect the rich. State taxes might affect you, and income tax definitely does.

Tax mistakes:

Federal estate tax: (2025: $13.61 million exemption)

• Most people won't hit this
• But if you do, it's 40% on amounts over the exemption
• Proper trusts can reduce this significantly

State estate/inheritance taxes: (varies by state)

• Massachusetts: $2 million exemption
• Oregon: $1 million
• New Jersey, Maryland, others have their own thresholds
• Much lower than federal, catches more people

Income tax on inherited retirement accounts:

• Non-spouse beneficiaries must empty inherited IRA within 10 years
• All distributions are taxed as income
• Poor planning can create huge tax bills

Solution:

• Consult estate planning attorney in YOUR state
• Consider trusts to minimize taxes
• Look into Roth conversions for retirement accounts
• Make use of annual gift exclusion ($18,000 per person in 2025)
• Life insurance can provide tax-free funds to pay estate taxes

Mistake 6: Not Addressing Digital Assets

The problem: You have thousands of dollars in digital assets nobody can access.

What gets lost:

• Cryptocurrency wallets (keys die with you, funds gone forever)
• Online businesses (revenue streams stop)
• Digital photos and documents
• Social media accounts
• Domain names and websites
• NFTs and digital collectibles
• Subscription services (keep charging after death)

Solution:

• Create digital asset inventory
• Document access information (encrypted)
• Include in estate planning documents
• Designate digital executor
• Check platform policies (Facebook legacy contact, Google inactive account)

[See our complete guide on digital legacy planning]

Mistake 7: Avoiding the Conversation

The problem: You have an estate plan but tell nobody about it.

What happens:

• Family doesn't know you have a will
• Executor doesn't know they're named
• Beneficiaries are surprised (often unhappy)
• Intent behind decisions is unknown
• Conflict arises from surprises

Your family needs to know:

• That you have a plan
• Who your executor is
• Where documents are located
• Your general wishes (don't need specific dollar amounts)
• WHY you made certain decisions

Solution:

Have "the conversation":

1. Tell key people you've done estate planning
2. Tell executor they're named and where documents are
3. Explain anything unusual (disinheritance, unequal distribution)
4. Share your values and reasoning
5. Answer questions
6. Update them when plan changes

Yes, it's uncomfortable. Do it anyway.

An explained decision, even if people disagree, causes less conflict than a surprise.

The Bonus Mistake: Doing It Yourself (When You Shouldn't)

When DIY works:

• Young, single, minimal assets
• Simple family situation
• Small estate well under estate tax thresholds

When you need a lawyer:

• Blended families
• Special needs beneficiaries
• Significant assets (house, investments, business)
• Complicated family dynamics
• Tax concerns
• Second marriages
• Estranged relatives

Cost of lawyer: $1,500-$5,000 for complete estate plan

Cost of screwing it up: Tens of thousands in probate issues, family lawsuits, and taxes

Your Action Plan

This week:

1. Review all beneficiary designations (life insurance, retirement accounts)
2. Check if you have power of attorney and healthcare directive
3. Confirm executor is still appropriate and willing

This month: 4. If no estate plan exists, consult attorney 5. If plan exists but old, schedule review with attorney 6. Create digital asset inventory 7. Schedule "the conversation" with family

This year: 8. Ensure all documents are updated 9. Store copies in multiple secure locations 10. Set annual reminder to review

Don't Be a Statistic

68% of Americans don't have a will. Of those who do, most haven't updated it in over 10 years. And even fewer have proper power of attorney documents.

Your legacy deserves better than default outcomes dictated by state law and family conflict.

These seven mistakes are all avoidable. They require planning, not luck. They require action, not procrastination.

Start today. Your family will thank you—even if you're not around to hear it.