How to Avoid Beneficiary Mistakes in Estate Planning

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Estate planning mistakes can cause significant harm to your family and cost a lot of money. Get the info you need to avoid these common mistakes here.

Author: Paul Black

Paul’s experience as the son of two parents with big health challenges is what led him to the work he does today and gives him first-hand knowledge of the challenges that many caregivers and family members face. After graduation from GSU Law, Paul was chosen from dozens of applicants nationwide as one of three 2010-2011 Borchard Foundation Law & Aging Fellows. Paul has been named as  a SuperLawyers “Rising Star” in the area of Estate Planning and as a member of Georgia’s “Legal Elite” by Georgia Trend magazine. Published on: July 02, 2022. 

Common Estate Planning Mistakes

Common Estate Planning Mistakes section

It’s never too early to start planning for your family’s future.

If you have questions, I’m here to help. There is no commitment and we provide free initial 15-minute phone calls. We look forward to meeting you.

It’s never too early to start planning for your family’s future.

If you have questions, I’m here to help. There is no commitment, and we provide free initial 15-minute phone calls. We look forward to meeting you.

A proper estate plan addresses and manages risks that could arise at the end of one’s life and beyond.

Estate plans are important, but it isn’t enough to just write a will and leave it at that. Creating a complete plan and avoiding common pitfalls and mistakes is critical!

Estate planning mistakes can be costly, time-consuming, and harmful to you and your family. Fortunately, the most common estate planning mistakes are easily avoided when you know what to watch out for. Here are a few common mistakes:

  • Ignoring your digital assets: We live in an increasingly virtual and digital world with online access to bank accounts, photographs, cloud storage, and social media accounts. Unfortunately, we often forget to grant power of attorney or beneficiary designation to have access authority and control our digital assets. If you fail to provide this authority, administering your digital assets will become very difficult and may lead to financial and emotional hardships.
  • Not considering advance directives: An advance directive contains instructions for your loved ones regarding your health and end-of-life care. You can also designate a person to make decisions for you if you can’t speak for yourself. Pre-planning for retirement should be included in your trust planning. Planning for Medicare funding protects your surviving spouse at home with Medicare bills and gives you a chance at nursing home care.
  • Have an experienced estate planning professional guide you through your estate plans and choose the person you want to inherit your retirement accounts. Your lawyer can also give you advice on a life insurance policy.
  • Not funding living trusts: The majority of estate plans make use of trusts. A trust is a crucial asset protection tool that can potentially shield your wealth from probate and high taxes. Failing to fund your trust makes the whole process pointless and defeats part of the purpose of estate planning.
  • Ignoring taxes: After drafting an estate plan, tax planning is crucial. Many people forget about estate tax liability. Aside from your estate owing taxes before beneficiaries are paid out, it is essential to consider how your gifts will affect individual heirs after the estate has paid out its taxes.
  • Not making gifts: Every year, the Internal Revenue Service allows us to gift up to a maximum amount that is excluded from estate taxes. Currently, the amount is $16000. Making these yearly gifts overall reduces your estate tax. Failing to consider tax consequences can have significant expenses on your beneficiaries.
  • Allowing your estate to be co-managed: While this might be an excellent thought to avoid probate, after your death, you leave the co-owner to deal with the other half of the property. They may be stuck paying taxes for both their taxable gift and your taxable estate. This includes handling the taxes involved with transferring assets in your estate.
  • Not planning for a disabled beneficiary: If you have a beneficiary with a disability, leaving them their inheritance does them more harm than good. Consult with lawyers for special needs planning to help you place their inheritance into a trust specifically designed to protect the beneficiary and keep them eligible for public assistance.
  • DIY estate planning: Creating a will and trust on your own is possible and inexpensive. But you might lack the strategic knowledge, experience, and foresight that a seasoned estate planning professional can provide. Also, failing to execute your estate plan properly might nullify part or all of it. This is particularly true if you have significant or complicated assets.
  • Including beneficiaries who cannot inherit: Oftentimes, people will try to name beneficiaries who cannot legally inherit. For example, if you want to leave your property to children of age below 18 years old, you must also name a property guardian who can manage the assets until the child or children come of age.

Georgia estate planning lawyer from the Law Office of Paul Black can help if you have questions about what to do to avoid any of these common issues.

Other Estate Planning Mistakes

Creating an estate plan ahead of time is important and can help avoid later estate planning mistakes in your wills, trusts, and other documents. Let’s discuss how we can avoid these mistakes.

Double Check Your Estate Planning Documents

It is important to reevaluate your estate planning and beneficiary forms after major life events or legislative changes to ensure that your wishes and the laws affecting your estate have not changed.

Proactivity on Taxes

Be proactive on new taxes as you plan your trust, and be aware of Georgia state inheritance and state estate taxes. Stay up to date on tax payments, including any property taxes, state income tax, and any others that apply to you.

Proper Estate Planning Budget

Sit down with an experienced estate planning attorney to develop a proper budget to fund your estate plan.

Leaving an Unintended Beneficiary

Imagine a situation where you have had a divorce, but you forget to update your beneficiary designations for retirement accounts and life insurance policies. When you fail to update your legal forms, your ex-spouse from prior marriage could inherit your property instead of the rightful heirs close to you.

You may want to consider dividing your estate equally among your beneficiary designations, or you may want to split it up differently. Either way, you might begin by listing your assets and estimating their value, then consider the amount each beneficiary should inherit.

Not Giving Your Trust a Title

In order for a trust to be valid, it must be able to be identified. People often choose to use their family’s name, the name of a piece of property, and/or the date in the name of their trust.

Procrastinating on Making Your Estate Plan 

Many people fail to draft legal estate planning documents to protect their assets after they’re gone simply because they are afraid of dying or do not want to think about passing away.

However, when you avoid dealing with your retirement accounts, investment accounts, life insurance, and other estate planning documents, you only make it harder for your surviving loved ones in the future.

If you fail to create a good plan, your assets will be distributed to the surviving spouse and children, which may or may not be your wish.

Outdated Trusts

Sometimes people plan a will and then leave it alone for decades. Of course, life goes on, and things change, such as the death of a family member, births, marriages, divorce, etc. All of these events can cause your documents to become outdated. It is essential to review your estate plan after any major life events to ensure it still accurately reflects your wishes.

The Dos and Don’ts of Beneficiary Designations

The selection of a beneficiary is an important matter that shouldn’t be done lightly. It determines who will receive your assets upon your death. It’s crucial to carefully consider who you designate as your primary and contingent beneficiaries.

Primary beneficiaries are the first in line to receive your assets, while contingent beneficiaries will only receive the assets if the primary beneficiaries predecease you or cannot inherit for some reason.

Consult with an estate planning attorney who can guide you through the process.

The Pitfalls of Naming Minors as Beneficiaries

Leaving assets to your children or grandchildren seems logical, but it can result in unforeseen complications. Since minors cannot directly manage assets, a court-appointed guardian may need to be assigned, which can be a lengthy and costly process.

When the minor reaches the age of maturity, they will gain unrestricted access to the inheritance, which they might not be prepared to manage responsibly.

A better alternative option could be setting up a trust or using a custodial account when wishing to leave assets to minors.

Avoiding Disputes Among Beneficiaries

Family disputes over inheritance can be intense and damaging. Sometimes it also affects family relationships. A possible way to avoid such disputes is by staying clear and explicit about your wishes in your estate planning documents. Consider discussing your plans with your family members to minimize surprises and potential conflicts after your death.

Keep in mind that fair doesn’t always mean equal. If you have good reasons to distribute your assets unequally, those reasons should be clearly communicated. It might be wise to involve a third-party mediator like an estate planning attorney to mediate any possible disagreements.

Consult with an attorney who can guide you about life insurance policies, dealing with insurance companies, and state income taxes, and provide you with knowledgeable insights on selecting a primary beneficiary while keeping your estate planning goals in the picture.

How you can Avoid Estate Planning Mistakes

The easiest way to avoid common estate planning mistakes is by having an estate plan that clearly states your beneficiary designations and desires.

With a solid plan in place, you avoid certain assets going through probate independently and can prevent extreme expenses and estate taxes. You can accomplish all this with the help of an estate planning attorney near me.

Reach us at 404.328.7283 or [email protected] for legal services at our law firm for your estate plan, revocable trust, financial power of attorney, disability planning, and related legal issues.


Frequently Asked Questions

What Can Override a Beneficiary?

An executor is someone left to protect the trust’s owner’s interests. In some circumstances, they can override a beneficiary, but this means going against the wishes of the will owner. There are limits on the executor’s actions, and doing this may require a prior court order.

Can a Beneficiary Designation be Challenged?

Yes, this can happen within six months after the will has been filed in a probate court if you have the standing to do so.

Legal challengers can include ex-spouses, a surviving spouse, business partners, and family members who have been excluded from the will.

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