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Top Estate Planning Mistakes or Misunderstandings – And How to Avoid Them

We have all heard the phrase: nothing in this world can be certain in life, except death and taxes. As an estate planner, I address these two issues every day. I counsel clients on the best strategies to pass their estates to their loved ones, how to efficiently manage their affairs if they can’t make decisions for themselves, and advise them on the most financially efficient ways to accomplish their goals. With nearly 20 years of estate planning experience, I have collected a list of common mistakes or misunderstandings.

#1. DIY Documents.

Estate plans should not be considered a “Do It Yourself” endeavor. With the guidance of an experienced estate planning attorney, you ensure that you’re considering all the issues, your planning goals are met, and your legacy will be easily passed on to others. Wills completed through automated computer programs or purchased at stationary stores may result in negative financial and substantive impacts to your loved ones.

#2. “I Don’t Need an Estate Plan.”

Everyone can benefit from an estate plan. Even if you think you don’t own anything, everyone should have a financial power of attorney and a medical power of attorney. Did you know that if you don’t create your own individualized estate plan, then the state of Oregon has a “One Size Fits All” plan for you? Unfortunately, Oregon’s “One Size Fits All” plan doesn’t meet the customized needs of many people, and it can lead to unintended consequences.

#3. Choosing the Wrong Decision Maker.

Many times, a parent will want their adult children to work together to make financial and medical decisions when the parent can no longer do so. Unfortunately, in my experiences, many times these types of plans don’t work well. Instead, when siblings disagree, an impasse may occur. In the worst-case scenario, litigation may be the only solution to resolve the conflict. Other times, people choose a friend for help, and then for a variety of reasons, the friend is no longer able to help. And on occasion a trusted person turns and becomes a financial abuser. Picking the right decision maker, aka fiduciary, is very important and should be a well-informed and thoughtful process.

#4. Thinking a Will Avoids Probate.

Probate is a court supervised administration of a decedent’s estate. Now don’t get me wrong, I don’t think probate is the 9^th level of Dante’s Inferno; and as an attorney, I am very familiar with the rules of court procedure. For certain situations, probate is a beneficial process. But time and time again, clients have the misunderstanding that their wills are not subject to probate. They are shocked when they learn that a will almost always ensures that an estate will be probated. To avoid probate, consider creating a revocable trust.

#5. Letting Your Plan Collect Dust.

Having a plan, but not looking at it again is a mistake. Estate planning is a dynamic process. The plan should not be chiseled in stone and then set on a shelf, never to be thought of again. In general, I recommend that clients review their estate plans every five years. And sooner if there have been significant life changes, such as marriages, divorces, births, substantial changes in assets, medical diagnoses, etc.

#6. “I’m Not Rich, So I Don’t Care About Estate Taxes.”

Thinking you don’t have enough to be concerned about estate taxes (also known as “The Death Tax”) may be a mistake. Even if you own less than $11.58 million which is the 2020 amount when the federal estate tax hits, your estate may still be subject to state estate tax. Both Oregon and Washington have state level estate tax. Without specific tax planning, an Oregonian who dies with a net worth more than $1 million has exposure to Oregon estate tax. The same is true for Washingtonians. However, Washington’s amount is more generous at $2.193 million in 2020.

It is never too late to prepare an estate plan. If you have more questions or want to talk about your estate planning goals and needs, contact one of our estate planning attorneys. Our combined years of estate planning experience is over 130 years.

Be sure to check out SYK’s newest video – featuring Anastasia and focusing on Estate Planning.

Anastasia (Stacie) Yu Meisner is a member of the SYK Estate Planners practice. Her practice focuses on estate planning, mediation, probate, trust and estate administration. In addition, she also works with guardianships and conservatorships, as well as business transactions and formation.

Often free internet advice on Do It Yourself ("DIY") professional matters is worth exactly what you pay for it: nothing. The internet has changed the way we interact with each other, the way we shop, and the way we manage our lives. Search tools like Google and Bing now steer users to millions of web pages, some of which contain “professional” advice on everything from medicine to law.

One of these sites that provides an online database of legal forms was recently investigated by the Attorney General in the State of Washington. This investigation was settled and the parties signed an Assurance of Discontinuance (pdf) on September 1, 2010. The Assurance highlights some of the pitfalls people should look out for when preparing their own legal documents online.

Article II of the Assurance lists the acts which the Attorney General determined were “unfair or deceptive acts or practices and unfair methods of competition in violation of 19.86.020 RCW”. These acts include the following:

Failing to offer estate planning legal forms in Washington that conform to Washington law.
Failing to clearly disclose that communications between the provider and Washington consumers are not protected by the attorney-client or work product privilege.
Comparing service costs with those of an attorney without disclosing to Washington consumers the fact that the provider was not a law firm.
Misrepresenting the costs, complexity and time required to probate an estate in Washington.
Misrepresenting the benefits or disadvantages in comparing estate distribution documents in Washington.
Failing to comply with 19.295 RCW (the statute dealing with estate distribution documents).
Engaging in the unauthorized practice of law by providing legal advice about self-help documents.

While the Assurance notes that it is not to be considered an admission by the provider and that it “shall not be considered a finding of wrongdoing,” the document does effectively spell out some of the questions individuals should be thinking about when preparing their own legal documents:

Do you have all of the correct forms? Many online law providers are not allowed to direct readers to particular or necessary forms.
Do the documents comply with all of the laws for the relevant state(s)? If you’ve got property or assets in more than one state, this is important.
Is there sensitive information that the individual would rather keep confidential?
How complex will the implementation of the documents be. For example, what will probate cost?
What will the process ultimately cost? If future litigation blows up because the forms are defective or insufficient, your estate and/or your beneficiaries will pay the price.

You’ve heard these warnings before: "If it’s too good to be true……" or "an attorney who represents himself has a fool for a client." The same cautionary advice holds true for those who opt to prepare their own legal forms using an online service. While some may be able to use these services to prepare inexpensive legal documents, the costs associated with enacting these documents and the opportunity for error can be significant.

Finally, if an attorney commits an error in preparing legal documents, the attorney is covered by malpractice insurance (or should be – some states demand mandatory insurance while others do not), but no such protection exists for those that prepare their own documents.

Estate Planning: Mistakes or Misunderstandings