By Lindsay Willson and Karen Hobson
In our estate planning practice, whether we are helping high-net worth individuals, family-owned business owners or young families, we urge all our clients to avoid these common pitfalls.
If you carefully discuss the below issues with counsel, you’ll be on the right path to best plan your estate.
1. Trying to plan for every possibility? Life is complicated. The same goes for estate planning when considering assets, relationships and intentions. Clients with minor children can feel overwhelmed imagining their children’s future careers, potentially absent spouses or medical needs. The only true constant is change — chasing hypothetical scenarios will only overcomplicate your estate plan and create headaches for later. The best estate plan is one that accounts for the here and now. When developing your plan, think of your current priorities. Who do you want to protect? What do you want to protect? A knowledgeable estate planning attorney can help navigate the rest.
2. Have outdated beneficiary designations? Too often, clients forget that assets with beneficiary designations (such as life insurance and retirement accounts) are passed on according to those designations — not as part of a revocable trust or will. For many Americans, this can leave the bulk of one’s wealth on the table. It’s essential to regularly review your beneficiary designations to ensure they align with your current wishes.
3. Investing across state lines? Very often, our real-estate rich clients will purchase properties in states in which they don’t live (hello, Malibu beach house!). However, your goodtime beach property can subject your estate to multiple bad-time probate proceedings if you don’t pay attention to how the real estate is titled. This type of expensive error is easily avoidable by holding title in a revocable living trust.
4. No plan for illiquidity? The old maxim reigns true — “nothing is certain except death and taxes.” Thanks to the 2017 Tax Cuts and Jobs Act, the 2025 gift and estate tax threshold per person is currently $13.99 million. This law will go away on January 1, 2026 (absent congressional action) so it’s important to remember that the $13.99 million figure may be halved to approximately $7 million very soon. Clients who have accumulated their wealth via illiquid assets (such as the family farm, private company stock and real estate investment assets) may not have the proper liquidity at death to pay administrative expenses and taxes, regardless of how sophisticated their planning documents are. Ensuring you have sufficient liquidity is crucial for properly administering your estate.
5. Kids as joint owners? Joint ownership of assets may be appealing to some. As an example, maybe you name your child as a joint owner on a bank account with the hope of relinquishing your day-to-day management responsibilities. Unfortunately, this means your joint account is joint in all respects. Because your child is a full-fledged owner, their present or future creditors may attempt to stake a claim over your assets. Furthermore, the joint account may not even get covered by your estate plan, as there is a presumption that a surviving joint owner will get the asset outright at the death of the other. For clients who want their children to get equal shares of their estate, a lack of careful planning can cause one child to gain at the expense of their siblings.
When it comes to your estate, the estate planning team at Tonkon Torp LLP is ready to help if you or a client have estate planning needs.
Karen Hobson and Lindsay Willson are attorneys in Tonkon Torp’s Estate Planning & Advocacy Practice Group, where Hobson also serves as chair. They specialize in advising individuals, from emerging wealth to high-net-worth clients, across a breadth of estate planning matters, including wills and trusts, probate and trust administration, and strategic estate and gift tax planning.
