The Top 10 Common Estate Planning Mistakes

By: Popular One Team

Avoiding these common mistakes can spare your family unnecessary stress.

Estate planning is essential for anyone who wants their assets and possessions to be passed along smoothly to their chosen heirs. Beyond money, it’s about ensuring your wishes are clear and your loved ones are spared the added burdens of legal disputes or financial hardships after you’re gone. Here are some of the most common estate planning mistakes and how to avoid them, so you can create a solid legacy for your family.

What is an estate plan?

An estate plan is a set of legal documents that determine how your assets will be handled after your death or if you become incapacitated. At its core, an estate plan typically includes a will, a trust, an advance healthcare directive, and power of attorney documents.

Even if you don’t have significant assets, an estate plan is still valuable, especially for expressing your wishes about medical care and potentially reducing family disputes.

Common estate planning mistakes to avoid

• Procrastinating: Waiting too long to plan may lead to unexpected consequences in case of incapacity or sudden death. Without a plan, your loved ones might face legal delays and uncertainty regarding your medical wishes.
• Creating an estate plan on your own: DIY plans may be incomplete or legally flawed. Work with a financial planner and estate attorney to ensure thoroughness and compliance.
• Leaving loved ones uninformed: Honest communication helps prevent confusion and conflict. Let your family know your intentions and give them clarity on what to expect.
• Keeping estate documents locked away: Share copies with your executor, trusted family member, and attorney. Provide contact info to your heirs so they know where to turn when needed.
• Missing key documents: A complete plan should include:
  • Last will and testament
  • Beneficiary designations (401(k), IRA, pensions, life insurance)
  • Living will and advance healthcare directive
  • Durable financial power of attorney
  • Funeral instructions
  • Proof of identity (SSN card, birth/marriage certificates, prenuptial agreements)
  • Deeds or loan documents for valuable assets
  • Living trust
  • Buy and sell agreement (for business owners)
• Overlooking digital assets: Designate a digital fiduciary for managing social media, crypto, and cloud accounts per your instructions.
• Forgetting about final arrangements: Specify your funeral preferences, fund them in advance, and relieve your family from financial and emotional stress.
• Ignoring taxes: Large estates or out-of-state assets may trigger federal or local estate taxes. Plan accordingly.
• Not updating your plan: Review it every 3 to 5 years or after life events (marriage, divorce, births, major acquisitions) to keep it relevant.
• Choosing the wrong executor or trustee: Pick someone responsible, unbiased, and willing to manage this duty. Discuss the role with them in advance.

Taking action for a secure legacy

Avoiding these common estate planning mistakes can spare your family unnecessary stress and help ensure your wishes are honored. An effective estate plan isn’t just for the wealthy – it’s for anyone who values peace of mind and wants to protect loved ones from additional burdens.

Start the planning process now, and revisit your plan as life evolves, to safeguard the legacy you’ve worked so hard to build.

At Popular One our team of professionals is ready to provide guidance on this topic and assist with other services such as managing your finances, investments, and risks. Contact your Private Banker today. Write to popularone@popular.com or call 787-281-7272 Monday through Friday from 8:00 a.m. to 5:00 p.m.