10 Common Estate Planning Mistakes Your Family Can't Afford to Make - Part 2

Because estate planning involves thinking about difficult topics like death, incapacity, and aging, it’s something many people understandably put off. As a Chicago estate planning attorney working with young families, I see this all the time—and unfortunately, that delay often creates unnecessary stress, expense, and complications for the people you love most.

To make matters more confusing, the rise of online estate planning platforms like LegalZoom®, Rocket Lawyer®, and Trust & Will® has led many to believe estate planning is just about filling out forms. But in reality, creating a plan that actually works when your family needs it requires a much deeper understanding of how the law applies to your specific assets, relationships, and goals.

In fact, without a thorough understanding of how the legal process works upon your death or incapacity, along with knowing how it applies specifically to your family dynamics and the nature of your assets, you’ll likely make serious mistakes when creating a DIY will or trust. And the worst part is that these mistakes won’t be discovered until you are gone—and the very people you were trying to protect will be the ones cleaning up the mess.

Estate planning is definitely not a one-size-fits-all endeavor. Even if you think your particular situation is simple, that turns out to almost never be the case. To demonstrate just how complicated estate planning can be, last week in part one, we highlighted the first five of 10 of the most common estate-planning mistakes, and here we wrap up the list with the remaining five mistakes.

06 | Not Updating Beneficiary Designations

In addition to reviewing and updating your core estate planning documents like your will, trust, and power of attorney, it’s crucial that you also update the documentation for your other assets, especially those with beneficiary designations. Some of your most valuable assets, like 401(k)s, IRAs, and life insurance policies, do not transfer via a will or trust.

Instead, these assets have beneficiary designations that allow you to name the person (or persons) you’d like to inherit the asset upon your death. Oftentimes, people forget to change their beneficiary designations to match their estate planning goals, which can lead to disaster. For example, if you get remarried and forget to update your 401(k), your ex-spouse from 20 years ago could end up inheriting your retirement savings.

Additionally, some people assume that because they’ve named a specific heir as the beneficiary of their IRA in their will or trust that there’s no need to list the same person again as beneficiary in their IRA paperwork. Because of this, they leave the IRA beneficiary form blank or list “my estate” as the beneficiary. But this is a major mistake—and one that can lead to serious complications and expense for your loved ones.

It makes no difference who is listed as the beneficiary in your will or trust; you must list the person you want to inherit the asset in the beneficiary designation, or your heirs will have to go to court to claim the asset.

And you should never name a minor child as a beneficiary of your life insurance or retirement accounts, even as the secondary beneficiary. If a child inherits assets, the assets become subject to control of the court until they reach the age of 18, and then, the assets are distributed outright without any protection or direction.

If you want a minor to inherit assets, you can create a special trust to hold the asset until the child comes of age, and name someone you trust to serve as a successor trustee to manage the assets until that time. At Kaplan Estate Law LLC, we can support you to choose the appropriate trust for this purpose to ensure your child gets the maximum benefit from their inheritance.

07 | Improper Execution

You could have the best estate planning documents in the world, but if you fail to sign them,

or sign them improperly, they will fail. This might seem trivial, but we see it all the time. A loved one dies, their family brings their estate planning documents to us, and we can’t help them because the documents were either not signed or were signed improperly.

To be considered legally valid, certain estate planning documents like wills must be executed (i.e. signed, witnessed, and/or notarized) following very strict legal procedures. For example, many states require that you and every witness to your will must sign it in the presence of one another. If your DIY service doesn't mention that condition (or you don’t read the fine print) and you fail to follow this procedure, the document can end up worthless.

08 | Choosing the Wrong Executors or Trustees

In addition to laws regarding execution, state laws are also very specific about who can serve in certain roles like executor, trustee, or financial power of attorney. In some states, for instance, the executor of your will must either be a family member or an in-law, and if not, the person you choose must live in the state. If your chosen executor doesn’t meet those requirements, he or she cannot serve.

Moreover, some states require the person you name as your executor to get a bond, which is like an insurance policy before he or she can serve. Such bonds can be difficult to get for someone who has a less-than-stellar credit score. If your executor cannot get a bond, it would be up to the court to appoint your executor, which could end up being someone you would never want managing your assets or a third-party professional, who could drain your estate with costly fees.

09 | Unintended Conflict Between Family Members

Family dynamics are—to put it lightly—quite complex. This is particularly true for blended families, where spouses have children from previous relationships. If you try to go it alone using a DIY document service, you won’t be able to consider all of the potential areas where conflict might arise among your family members and plan ahead to avoid such disputes. After all, even the best set of documents will be unable to anticipate and navigate these complex emotional matters—but we can.

Every day we see families end up in lifelong conflict due to poor estate planning. Yet, we also see families brought closer together as a result of handling these matters the right way. When done right, the estate planning process is actually a major opportunity to build new connections within your family, and we are specifically trained to help you with that.

10 | Failing to Properly Name Guardians for Minor Children

If you are a parent with children under the age of 18 at home, your number-one estate planning priority should be selecting and legally documenting both long and short-term guardians for your kids. Guardians are the people legally named to care for your children in the event something happens to you.

If you’ve named guardians for your minor children in your will—even with the help of another lawyer—your kids could still be at risk of being taken into the care of strangers.

For instance, if you’ve named guardians for your kids in your will, what would happen if you became incapacitated and were no longer able to care for them? Did you know that your will only becomes operative in the event of your death, and it would do nothing to protect your children in the event of your incapacity?

Or perhaps the guardians you named in your will live far from your home, so it would take them several days to get there. If you haven’t made legally-binding arrangements for the immediate care of your children, it’s highly likely that they will be placed with the authorities until those guardians arrive. And does anyone even know where you will is located and how to access it? How can they prove they are your children’s legal guardians if they can’t even find your estate plan?

These are just a few of the potential complications that can arise when naming legal guardians for your kids, whether in your will or as a stand-alone measure. And if just one of these contingencies were to occur, your children would more than likely be placed into the care of strangers.

At Kaplan Estate Law LLC, we offer a comprehensive system known as the Kids Protection Plan, which is included with every estate plan we prepare for families with young children.

If you have already named long-term guardians in your will or as a stand-alone measure, either on your own or with a lawyer, we can review your existing legal documents to see whether you have made any of the most common mistakes that could leave your kids at risk. From there, we will revise your plan and put the proper protections in place to ensure your children are fully protected.

Life & Legacy Planning: Do Right By Those You Love Most

The DIY approach might work for simpler projects, but estate planning is one area where thoughtful, personalized guidance makes all the difference.

If you’re looking for a Chicago estate planning attorney to help you put the right plan in place—or to review an existing plan—we’re here to help. At Kaplan Estate Law LLC, we guide you through a Life & Legacy Planning Session designed to give you clarity around your assets, your options, and what would actually happen for your loved ones in different scenarios.

And if you already have a plan in place, reviewing it with a Chicago estate planning attorney can help ensure everything is properly aligned, updated, and fully working the way you intend. At Kaplan Estate Law LLC, we believe estate planning is about more than documents—it’s about making intentional decisions today to protect the people you love and create a legacy that reflects what matters most. Contact us today for a free initial consult to get your plan started.