10 Estate Planning Mistakes That Could Cost You and Your Family

Estate planning isn't complicated, but many people get it wrong. The consequences of these mistakes don't affect you; they affect your family during one of the most difficult times of their lives.

These common mistakes can cause family conflict, legal battles, unnecessary taxes and outcomes no one wanted.

The good news? They're all completely preventable.

Here are the 10 most common (and costly) estate planning mistakes, and how to avoid them.

1. Not Having Any Estate Plan At All

This is the biggest mistake by far. According to recent surveys, only 32% of Americans have a will. That means 68% are leaving their family's future entirely to state law and court decisions.

Why people make this mistake:

• They think they're too young or too healthy

• It feels overwhelming or expensive

• They keep meaning to get around to it

• They don't realize the consequences

The real cost: If you die without an estate plan:

• Courts decide who raises your children

• Your assets might not go to the people you'd choose

• Family members might fight over your estate

• Probate takes longer and costs more

• Your family faces difficult decisions without any guidance from you

The fix: Stop reading right now and create a will. In less than 20 minutes, you could make a free will with Herbie’s Basic Will platform, or upgrade to a subscription for complete planning needs. Once you have something—anything—in place, you can refine it later. But you need a starting point!

2. Naming the Wrong Guardian

Many parents choose guardians based on obligation rather than what's actually best for their children.

Common guardian mistakes:

• Naming grandparents who are too old to raise young children

• Choosing a sibling because "they'll be hurt if I don't"

• Assuming your brother and his wife will stay married

• Never having the conversation with the person you chose

• Forgetting to name a backup guardian

The real cost: Your children might end up with someone who isn't equipped to raise them. Or worse, family members might fight in court over custody while your children wait in temporary care.

The fix: Choose based on who would actually be the best parent to your children. Consider their values, stability, relationship with your kids, and willingness to take on the responsibility. Then actually ask them. And name at least one alternate guardian in case your first choice can't serve.

3. Outdated Beneficiary Designations

Beneficiary designations on retirement accounts, life insurance and bank accounts override your will. Yet people frequently forget to update them after major life changes.

Common scenarios:

• Your ex-spouse is still listed on your 401(k) from 10 years ago

• Your life insurance still goes to your parents instead of your children

• You never updated beneficiaries after getting married

• Your college roommate is still listed on your IRA

The real cost: Your assets might go to people you haven't spoken to in years while your spouse and children get nothing. And it's all perfectly legal, as beneficiary designations generally override your will.

The fix: Review all beneficiary designations right now:

• Retirement accounts (401k, IRA, etc.)

• Life insurance policies

• Bank accounts with transfer-on-death designations

• Investment accounts

Update anything that's wrong. Then review again whenever you experience a major life event (marriage, divorce, birth, death). It’s probably best to revisit these annually.

4. Not Funding Your Trust

Creating a trust is only half the job. If you don't actually transfer assets into the trust (called "funding"), the trust can't protect them.

What this looks like:

• You paid $3,000 for a trust, signed all the documents, and put them in a drawer

• Your house is still in your name, not the trust's name

• Your bank accounts were never retitled

• You thought the trust "automatically" covered everything

The real cost: Assets not in the trust go through probate anyway, exactly what you created the trust to avoid. You wasted thousands of dollars on a trust that doesn't work!

The fix: After creating a trust, immediately begin funding it:

• Transfer real estate deeds to the trust

• Retitle bank and investment accounts

• Update business ownership documents

• Make the trust beneficiary of non-retirement accounts

Or use a platform like Herbie, which helps you make a trust and then supports you with funding the trust.

5. Leaving Assets Directly to Minor Children

You can't leave significant assets directly to children under 18 (or 21 in some states). Courts require an adult to manage the money until they reach legal age. And then they get it all at once.

What this looks like:

• You named your kids as beneficiaries on your life insurance

• Your will leaves your house directly to your teenage daughter

• You made your 10-year-old beneficiary of your retirement account

The real cost: A court appoints a guardian or conservator to manage the money with court oversight, annual accountings and legal fees. Then your child receives everything in a lump sum at 18 or 21—whether they're ready or not.

The fix: Don’t name minor children directly as beneficiaries. Instead:

• Create a trust to hold assets for their benefit

• Name the trust as beneficiary

• Specify when and how they receive distributions

• Choose a responsible trustee to manage the money

6. Choosing the Wrong Executor or Trustee

Your executor (for a will) or trustee (for a trust) has enormous responsibility. Choosing the wrong person creates chaos.

Common mistakes:

• Naming your oldest child even though they live across the country and hate dealing with paperwork

• Choosing your brother because he's family, even though he's terrible with money

• Naming co-executors who don't get along

• Picking someone without asking if they're willing

The real cost: Your estate administration may take years instead of months. Assets might be mismanaged. Beneficiaries might not receive what you intended. Your chosen person might decline, forcing the court to appoint someone.

The fix: Choose someone who is:

• Responsible and organized

• Trustworthy with money

• Willing to take on the job

• Physically located where they can handle affairs

• Able to make tough decisions without excessive emotion

Ask them first. Name an alternate. And consider a corporate trustee for very large estates or complex situations.

7. Not Planning for Incapacity

Most estate plans focus on what happens after death, ignoring the very real possibility of incapacity from illness or injury.

What's missing:

• No financial power of attorney

• No healthcare power of attorney

• No living will or advance directive

• No instructions for disability management

The real cost: If you're incapacitated without these documents, your family must go to court to get conservatorship or guardianship. This process:

• Takes months

• Costs thousands in legal fees

• Requires annual court accountings

• Removes your family's privacy

• Continues until you recover or die

The fix: Every estate plan should include:

• Financial power of attorney: Names someone to manage your money and property

• Healthcare power of attorney: Names someone to make medical decisions

• Living will: Documents your end-of-life care wishes

Also, if you transfer assets to a Revocable Living Trust, then those assets can be used by a Trustee for your benefit even if you’re incapacitated.

These documents help during incapacity, not just after death. With a Herbie subscription, you can download applicable state forms. 

8. Forgetting About Digital Assets

You have tons of digital assets: online accounts, digital photos, business websites, social media accounts. But can your family access them?

Common problems:

• No one knows your passwords

• You haven't documented your accounts

• Terms of service prohibit sharing login credentials

The real cost: Digital assets become inaccessible. Family photos disappear. Online businesses shut down. Your digital legacy vanishes.

The fix: Create a digital asset inventory listing:

• All online accounts and platforms

• Password manager master password

• Digital storage locations

• Instructions for accessing everything

Store this securely (not in your will, which becomes public) and tell your executor where to find it.

Also consider cryptocurrency:

• Cryptocurrency is missing because no one has your keys

• The assets become permanently lost

• Instead, inventory your crypto and the wallet information

9. Never Updating Your Plan

Estate plans aren't "set it and forget it." Life changes, and your plan needs to change with it. This is why Herbie is a subscription platform – we’re always here for you!

Triggers that require updates:

• Marriage or divorce

• Birth or adoption of children

• Death of a beneficiary or named agent

• Significant change in assets

• Moving to a new state

• Changes in tax laws

• Your children reaching adulthood

• Strained relationships with named individuals

The real cost: Your plan becomes outdated and might not reflect your current wishes. You might leave assets to an ex-spouse. Your deceased parent might still be named as guardian. Your plan might not comply with new state laws. Your new state of residence doesn’t treat your property the same as your former state.

The fix: Review your estate plan:

• Every year as a baseline

• After any major life event

• When you hear about changes in estate planning laws

Choose an estate planning solution that makes updates easy. With Herbie, you can update your documents anytime at no additional cost rather than paying attorney fees for every change.

10. Ignoring Tax Consequences

While most families won't face federal estate taxes, poor planning may create unnecessary income tax burdens for beneficiaries.

Common mistakes:

• Not considering capital gains tax on appreciated assets

• Forgetting about income tax on retirement accounts

• Overlooking state estate taxes (in the 12 states that have them)

• Missing opportunities for tax-efficient giving

The real cost: Your beneficiaries might pay thousands more in taxes than necessary. For larger estates, this could mean hundreds of thousands in unnecessary tax liability.

The fix: For most families, basic planning is sufficient. But if your estate exceeds $1 million or includes highly appreciated assets, consider consulting with a tax professional about tax-efficient strategies.

The Bonus Mistake: Procrastination

Perhaps the costliest mistake of all is simply waiting. Every day without an estate plan is a day of unnecessary risk.

Why it matters: You never know when something might happen. Young, healthy people die unexpectedly. Accidents happen. Illness strikes without warning.

Your family deserves protection today, not "eventually."

The fix: Create a basic estate plan right now. Start with the essentials:

1. Create a will (20 minutes)

2. Name a guardian for your kids

3. Designate beneficiaries on accounts

4. Create powers of attorney

Perfect isn't the enemy of good—good is the enemy of nothing. Get something in place, then refine it over time.

Your Action Plan

Don't let your family become a cautionary tale. Here's what to do right now:

Today: Create a basic will with Herbie (free, 20 minutes), or sign up for a Herbie subscription

This week:

• Review all beneficiary designations

• Have the guardian conversation

• Choose your executor/trustee

This month:

• Add powers of attorney

• Create your digital asset inventory

• Tell family where to find documents

This year:

• Reconsider whether you need a trust (if you chose the basic will)

• Review with any major life changes

• Educate yourself on estate planning basics

The Bottom Line

Estate planning mistakes are costly, but they're preventable. The tools exist to create high-quality plans affordably and efficiently.

You don't need to spend thousands. You don't need months of meetings. You just need to take action.

Start with Herbie for free →

Your family's future is too important to leave to chance, or to postpone any longer.