A signed will, a funded trust and a list of named beneficiaries can create a powerful sense of security for individuals mapping out their estate: The paperwork is done, so the plan must be ironclad.
In reality, even the most carefully designed estate plans can quietly fall apart when left unattended.
Anyone actively engaged in or preparing to start the estate planning process should be fully aware of where they may be exposed to vulnerabilities, which life events should prompt an immediate review and reevaluation and what to bring with them when meeting with an estate planning attorney.
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Here are five of the biggest myths in estate planning, each paired with the best practice to follow instead.
Myth No. 1: The will and trust always have the final say
It seems logical that a will or trust controls where everything goes. In practice, beneficiary designations on retirement accounts, life insurance policies and similar assets generally take precedence over both.
Consider a revocable trust that thoughtfully establishes a separate share for each child in a family. If the largest retirement account names just one child as beneficiary, that single form quietly bypasses the entire trust structure. The funds go directly to the named child.
Strategy tip: Treat beneficiary designations as a core component of a coordinated and comprehensive estate plan and confirm that every designation is made with intent that is reflected within the will and trust.
Myth No. 2: Once beneficiaries are named, the job is done
Standard beneficiary forms carry default rules that routinely surprise families. For example, if three adult children are each named as one-third beneficiaries and one of them dies first, that child’s share typically flows to the surviving siblings, rather than the deceased child’s own children.
In such a scenario, the grandchildren are unintentionally disinherited by a form nobody thought to revisit.
When assets do reach minors through beneficiary designations, the results are rarely good: The child receives full control at 18. Custodial Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts are irrevocable, and compounding growth over time can gradually turn modest gifts into a substantial sum no teenager is properly prepared to manage.
In our own practices, these accounts have produced some of the most difficult conversations we have ever had — a parent watching a 17- or 18-year-old gain control of far more money than anyone ever intended, with no legal way to slow it down.
By the time a family realizes the account has ballooned, nothing can legally stop the transfer.
Likewise, divorce introduces its own trap. Some states automatically sever a former spouse’s beneficiary designation the day a divorce is finalized. Anyone who intends to keep an ex-spouse as beneficiary must re-execute the designation after the divorce is final, or the law may quietly override the plan.
Strategy tip: Review every beneficiary designation after any major life event and at least every five years. Make sure to review beneficiary designations on accounts with less common beneficiary designation options such as payable on death (POD) or transfer on death (TOD).
Myth No. 3: More documents mean more protection
Complexity is not the same as security. While an estate plan may become more elaborate with every well-intentioned addition, it can also become more fragile. Key warning signs include:
An uncoordinated patchwork of paperwork. Wrangling several documents not designed to work together — such as a living trust from one attorney and powers of attorney from another — can add up to produce disaster.
Outdated assumptions. The federal estate tax exemption now sits at $15 million for individuals; roughly two decades ago, it was $1 million. Sophisticated structures built under the old rules can be obsolete today.
Assets ignored by documents. A closely held business, a buy-sell agreement or a family investment entity can derail everything.
Forced togetherness. A family cabin left jointly to three children living in three different states, further complicated by a provision forbidding its sale, is a recipe for resentment. So are co-fiduciaries, which generate an outsized share of estate litigation.
Strategy tip: Favor coordination over accumulation, revisit older structures as the law changes and name one person at a time.
Myth No. 4: The attorney will flag any problems
As former practicing estate planning attorneys ourselves, we say this with genuine affection for the profession: Attorneys are, by the design of their practice, reactive.
They respond to what clients bring them, and they rarely reach out unprompted to ask whether a plan still reflects a client’s life.
So, the responsibility for noticing that a named guardian is no longer needed, or that a personal rift has made a chosen trustee a poor fit, tends to fall on the client.
Strategy tip: Complete three steps before any attorney meeting:
- Do a cursory self-review. Check who is named and in what roles, the ages at which distributions occur and whether significant assets are mentioned in the documents at all.
- Articulate wishes in plain language. An effective plan maps who receives what, in what proportions and under what conditions, no legal vocabulary required.
- Bring a personal financial statement. Provide a clear accounting of what is owned, how it is titled and who else holds an interest.
The stakes of that last step are easy to underestimate. We once worked through a client’s entire plan, only to have her mention, almost in passing, that she had been diagnosed with stage IV cancer.
Attorneys can work with only what they are given, and one undisclosed detail can quietly undo an otherwise flawless plan.
It also pays to ask the attorney’s opinion directly. Asking, “Would this work in my situation?” invites a far more engaging answer than a directive ever will.
Myth No. 5: A good plan is built to last a lifetime
An estate plan is not an immovable monument; it is a living document. Trying to solve for the next 30 years is a surefire recipe for decision paralysis.
The better question is simpler: If something major happened in my life within the next five to 10 years, how should my estate plan follow suit?
There is no standard estate plan. The power of a good estate plan lies in how precisely it reflects a particular family, its assets and the wishes of the person drafting it.
Strategy tip: Plan for the foreseeable future and resist any plug-and-play template.
The strongest plans are not the longest or the most sophisticated, but rather, the ones reviewed regularly, coordinated carefully and shaped by owners who stay engaged.
An intentionally designed plan does not simply sit in a drawer looking impressive; it makes a meaningful difference for the family it was designed to serve.
Ultimately, the most effective estate plan isn’t the one with the most documents, but the one that stays coordinated across wills, trusts and beneficiary designations and is revisited after every major life event.
By staying actively engaged, individuals can ensure their plan continues to protect the family it was built to serve rather than falling victim to the default rules and outdated assumptions that catch so many families off guard.
Shelby Anderson, J.D., CEPA®, is a Senior Wealth Planner at Clark Capital Management Group. In this role, Shelby works closely with clients’ legal and tax advisers to provide client-facing expertise across a wide range of wealth planning strategies.
Patrick Schultz, J.D., CEPA®, is a Senior Wealth Planner at Clark Capital Management Group. In this role, Patrick works closely with clients’ legal and tax advisers to provide client-facing expertise across a wide range of wealth planning strategies.
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
