How to Avoid Common DIY Estate Planning Mistakes

1. Failing to Properly Execute Documents

Many DIY estate plans fail due to missing signatures, incorrect forms, or lack of legal formalities.

1.1 Ensure Your Will Is Legally Valid

A will is only effective if it meets state legal requirements.

How to do this:

• Research your state’s requirements for signing and witnessing a will.
• Ensure your will is signed in front of the required number of witnesses (often two).
• If required in your state, have your will notarized for added protection.

Why it matters:

• A will that does not meet legal standards can be challenged or deemed invalid.
• Ensures your wishes are honored and followed without court disputes.

1.2 Avoid Handwritten or “Do-It-Yourself” Wills Without Legal Review

Handwritten wills (holographic wills) are not legally recognized in all states.

How to do this:

• If using a handwritten will, check if your state allows it.
• Consider having your DIY will reviewed by an attorney to ensure it is valid.
• Avoid using generic online templates that may not comply with your state’s laws.

Why it matters:

• Handwritten wills can create ambiguities, legal challenges, and probate delays.
• Prevents unnecessary legal battles among heirs.

2. Naming the Wrong People in Key Roles

Your estate plan is only as strong as the people you appoint to carry out your wishes.

2.1 Choose the Right Executor

Your executor is responsible for managing your estate and distributing assets.

How to do this:

• Select someone who is organized, trustworthy, and capable of handling financial matters.
• If your estate is complex, consider appointing a professional executor instead of a family member.
• Name a backup executor in case your first choice cannot serve.

Why it matters:

• An unqualified executor can cause delays, mismanage assets, or create legal issues.
• Ensures your estate is administered efficiently and fairly.

2.2 Select a Reliable Financial and Medical Power of Attorney

The people you appoint must be responsible and able to act in your best interest.

How to do this:

• Choose a financial power of attorney to manage money, bills, and assets if you become incapacitated.
• Select a medical power of attorney who understands your healthcare wishes.
• Ensure they are willing and able to take on these responsibilities.

Why it matters:

• The wrong person could mismanage finances, ignore your medical wishes, or create family conflicts.
• A strong power of attorney ensures your affairs are handled properly.

3. Failing to Fund a Trust Properly

Setting up a trust is only the first step—funding it correctly ensures it works as intended.

3.1 Transfer Assets into the Trust

A trust only avoids probate if it actually holds assets.

How to do this:

• Retitle real estate, bank accounts, and investment accounts in the name of the trust.
• Work with financial institutions to update ownership on accounts.
• Regularly review your trust to ensure new assets are properly transferred.

Why it matters:

• Unfunded trusts do not avoid probate, defeating their purpose.
• Ensures your trust protects and distributes assets as intended.

4. Not Updating Beneficiary Designations

Certain assets transfer outside of probate, making beneficiary designations crucial.

4.1 Regularly Review and Update Beneficiaries

Outdated beneficiaries can result in assets going to unintended recipients.

How to do this:

• Review retirement accounts, life insurance policies, and payable-on-death (POD) accounts regularly.
• Update beneficiaries after major life events like marriage, divorce, or the birth of children.
• Confirm that designations match your estate planning goals.

Why it matters:

• Beneficiary designations override wills, meaning an outdated designation could leave assets to an ex-spouse or deceased relative.
• Keeps asset distribution aligned with your current wishes.

5. Overlooking Estate Taxes and Debts

Ignoring tax implications and unpaid debts can create financial problems for heirs.

5.1 Plan for Estate Taxes If Necessary

Large estates may be subject to federal or state estate taxes.

How to do this:

• Consult a financial advisor to determine if your estate is subject to taxes.
• Use strategies like gifting assets or charitable donations to reduce tax burdens.
• Consider trusts or life insurance policies to help heirs cover estate taxes.

Why it matters:

• Avoids unexpected tax bills for heirs.
• Helps preserve more of your wealth for your beneficiaries.

5.2 Address Outstanding Debts

Debts do not disappear when you pass away.

How to do this:

• List all loans, credit cards, and other debts in your estate plan.
• Ensure there are assets available to pay off debts.
• Consider life insurance or other strategies to protect heirs from financial burdens.

Why it matters:

• Prevents creditors from seizing assets meant for your loved ones.
• Ensures a smooth settlement of your estate.

6. Failing to Store and Share Estate Documents Properly

Even a well-crafted estate plan is useless if no one knows where to find it.

6.1 Keep Estate Documents Secure Yet Accessible

Important documents should be easy to locate when needed.

How to do this:

• Store wills, trusts, and power of attorney documents in a fireproof safe or with an attorney.
• Ensure your executor and key family members know where to find them.
• Keep digital copies in a secure, encrypted location.

Why it matters:

• Prevents delays in settling the estate.
• Ensures legal documents can be accessed quickly in emergencies.

7. Not Reviewing and Updating Your Estate Plan Regularly

Life changes can make an outdated estate plan ineffective.

7.1 Reevaluate Your Estate Plan Every Few Years

Changes in your life or the law may require updates.

How to do this:

• Review your estate plan every 3-5 years or after major life events.
• Update beneficiaries, executors, and trustees as needed.
• Ensure your estate plan complies with new laws or tax regulations.

Why it matters:

• Prevents outdated plans from causing problems.
• Ensures your assets are distributed according to your current wishes.

Final Thoughts

DIY estate planning can be risky if mistakes are made. To ensure your plan is effective, properly execute documents, name the right people, fund trusts, update beneficiaries, and review your plan regularly. If you are unsure about any step, consulting an estate planning attorney can help prevent costly errors. Taking these precautions now will provide peace of mind and ensure your wishes are honored.