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Estate Planning Mistakes You Can Make

how to avoid estate planning mistakes
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17 common Estate Planning mistakes you can make and how to avoid them

We all want to have certainty that the wealth and assets we have will eventually be passed on to our loved ones and the next generation for them to benefit from and enjoy. However, this is very unlikely to happen in the way you would want without putting some form of Estate Planning in place. Even then, without the right professional advice and guidance, Estate Planning mistakes can easily be made that will impact what your chosen beneficiaries receive.

Estate Planning is about making sure you have all the right legal documents in place to carry out your wishes and manage your estate in the event of your death or ill-health. Taking the time now to plan what happens to the legacy you leave behind, can help reduce your Inheritance Tax bill and ensure your family will have less to worry about when you are gone.

Estate Planning is so important because failing to make plans for your Estate can lead to unintended consequences for your beneficiaries, including the loss of wealth through paying unnecessary Inheritance Taxes and Care Fees or in the event of a divorce or relationship breakdown.

1. Failing to make a Will

Making a Will is the most basic form of Estate Planning you can do. If you die without leaving a Will in England and Wales, your property, money, assets, and possessions will be shared out according to the Rules of Intestacy. That’s the legal term which means that the state will decide who inherits what from your estate, in what order, and by what percentage split.

The result of this process can be that the elements that make up your Estate can pass to someone you hadn’t intended to be a recipient, or that someone you want to pass things on to receives nothing.

Common examples are someone who is living with a partner to whom they are not married, will not be entitled to inherit anything from the deceased’s estate without a Will. Perhaps you have a sibling who you would not want to benefit from your estate should you die, who is very likely to receive a share under the Rules of Intestacy.

The rules for Scotland and Northern Ireland are slightly different but there are some common principles.

You can find out more about the rules of Intestacy in our article – what happens if you die without a Will?

2. Letting your Will go out of date

Whenever a significant event has occurred in your life, such as a marriage, a re-marriage, a divorce, new children, grandchildren, children from a new relationship, or the loss of a loved one, you should be updating or replacing your Will.

This is sadly one of the most common Estate Planning mistakes we see, and if you have failed to update your Will, your original Will and wishes will be used to distribute your Estate.

A well-drafted Will should ensure that the vast majority of future life changes have been predicted and allowed for through the crafting of the Will. However, it is always a good idea to review your Will periodically to ensure it still does what you originally intended it to do.

The key triggers to update a Will are:

  • You remarry. Marriage revokes a Will in England and Wales (excludes Scotland)
  • You get divorced. A divorce will not revoke a Will
  • A Beneficiary or Executor named in the Will has died or needs changing
  • You want to change who receives what or to add an additional legacy
  • Additional children, grandchildren, or stepchildren have come into the family
  • Your Will has already been amended with a Codicil and your wishes are becoming unclear or could be misinterpreted by the volume and complexity of the changes made

3. Physically amending or changing your Will

Thankfully, one of the less common Estate Planning mistakes we see is when someone has physically changed or amended the original Will documents in any way. A Will is a legally binding document that has been drafted, witnessed, and signed as a true and accurate account of the creator’s wishes. Alter the original Will document, writing on it, adding amendments to it, or changing it in any way will make it invalid.

If you need to change or amend the terms set out in your Will, we recommend you seek professional help to determine if the Wills can simply be amended or if a new Will needs to be drafted.

This will depend on the level and nature of the changes you want to make. Significant changes are almost always better served through the creation of a new Will. When you make a new Will, you are automatically revoking any existing Will.

By using a document called a Codicil, small changes such as changing your Executors, or adding a legacy, can be made by simply updating your existing Will.

4. Assuming a Will is something that is only required in later life

It is very easy to assume that a Will is something that you only need in your later years and it’s an expense that is just not required in your young adult life.

Over 60% of adults in the UK do not currently have a Will. This means that well over 30 million people run the risk of having their Estates distributed according to the Laws of Intestacy. That means the Government decides who inherits your Estate and in what proportions.

As soon as someone turns 18 they should consider having a Will. While they may not yet have amassed a big Estate, they could well have young dependents who will need guardianship in their absence, some wealth, as well as physical and digital assets they would want to be protected.

An Online Will is a great entry point for anyone currently without a valid Will in England and Wales who would like the security and peace of mind that they have protected their loved ones with a legal and valid Will.

5. Putting your faith in the fairness of others

We would all like to think that when we pass our loved ones will rally around and distribute your wealth and Estate in a fair and even handed manner, making the best assumptions possible about what your wishes would have been.

In reality, this is a highly emotional and stressful time for those we care about most, and leaving them to have to second guess what we would have wanted to happen with your Estate will only compound this poignant period in their lives.

Not every family has a harmonious relationship and all too often we hear of squabbles and arguments among surviving family members if there is no Will or the deceased’s wishes have not been made clear.

Contested Wills can be damaging to relationships among your family, and expensive to resolve if decisions about your Estate are legally contested.

A well-prepared Will can help avoid these arguments and avoid making your passing even more stressful for your survivors.

6. Failing to provide for children

Drafting your Will is about more than detailing how your Estate is divided up, you can also specify who should look after your Dependants in the event of your death. You can also appoint a Legal Guardian for anyone under 18 years of age. Without your legally documented wishes, the decision could be left to the Family Courts to appoint a Guardian, who could well be someone you would not want.

Even if you have named friends or family members to be your children’s godparents, this isn’t legally binding.

New parents should ensure their children are provided for financially in the event of their own deaths through their Wills. This could include stipulations about putting aside money for their education, annual clothing allowances, financing hobbies, or establishing a nest egg to buy a home.

The law states that only spouses, civil partners, or blood relatives can automatically inherit if there is no Will. Your step-children may be a big part of your life or even be your only children, but if you want to provide for them, you’ll need to write a Will that includes them. The same goes for foster children or any other dependants who may rely on you for support.

7. Failing to protect your unmarried partner

Unless you have specifically stated so in your Will, an unmarried partner is not entitled to inherit anything from your Estate, regardless of how long you’ve been together. Without a Will, under the Rules of Intestacy, your Estate could pass to your young adult children who could choose to remove your partner from the property and sell it!

By writing a Will, you can ensure your partner will receive their fair share of your Estate and you can stipulate the right for them to occupy the property for life or another stated term, even if you bequeath the house to your children.

8. Failing to safeguard your family home

If the family home is in your name, your unmarried partner and step-children are not automatically in line to inherit it should you die without a Will, resulting in them potentially losing their home.

Even if you own the property together, as Tenants in Common, there is no automatic right for your half of the house to pass to your surviving unmarried partner without a valid Will. Your share would instead follow the Laws of Intestacy and pass to your surviving next of kin, potentially leaving your partner owning half the property with another family member.

Again, this is one of the more common Estate Planning mistakes we see and one that is easily remedied by ensuring your Estate Planning documents detail your wish to leave your partner a share of the property, or a right to reside in the property.

9. Putting the wrong people in charge of your affairs

At Redwood, we ALWAYS recommend that you appoint someone you know and trust to be an Executor. Appointing professionals can lead to costly additional fees for your loved ones. Should they need professional help and advice, they can hire professional advice when they need it.

An Executor is named in a Will to carry out or execute the wishes of the deceased and distribute the estate upon death. In England and Wales, a person must be at least 18 years old to be an Executor and of sound mind.

The Executor has a list of tasks they are legally obliged to carry out. If at any point you are struggling with the legal or financial implications of being an Executor, Redwood Wills & Trusts are always at hand to help, should you need it.

Through your Will, you can stipulate who you would like to settle your affairs when you have passed away. You will nominate named Executors to be in charge of carrying out your final wishes.

Choosing your Executor in advance allows you to select the people you most trust and allows the Executors to understand their role.

10. Trusting the wrong Trustees

If your Will has protective Trusts crafted into it then you will have appointed Trustees to administer those Trusts when they become live, and just like appointing Executors to manage your Will wishes, you must select the right people to carry out the role.

At Redwood, we ALWAYS recommend that you appoint people you know and trust to be your Trustees. As we said previously, appointing professionals can lead to costly additional fees for your loved ones. Should they need professional help and advice, they can hire professional advice when they need it.

All Estate Planning mistakes are avoidable and many won’t cost you a penny to implement. Appointing your loved ones as Trustees and Executors to your Estate Plan is free, but the consequences of not doing so can be very costly indeed!

11. Discussing Estate Planning as a family

Few of us relish the thought of having a conversation with our parents about their Wealth and Estate Planning or, with our children and beneficiaries about what we would like for ourselves when we die. Yet it can be one of the most important conversations for them and you that you will ever have. The financial and emotional impacts that can come as a result of a failure to plan can be deep and long-lasting for those left behind.

This is one of the simplest Estate Planning mistakes to avoid or put right and the great news is that it won’t cost you a penny to implement!

Our blog article How To Talk To Elderly Parents About Estate Planning has some great hints and tips for getting these conversations started.

12. Failing to inform your beneficiaries

Following on from Point 11, one of the Estate Planning mistakes we see on the rise is a failure to inform your beneficiaries and those who might expect to be a beneficiary about what your Will will actually say.

If there are some decisions made that may prove controversial to someone expecting to be included who is not, or who might expect to receive something that they won’t, then there is a high probability that the Will may be contested.

While it may seem like an uncomfortable conversation to consider having now, it will really help your loved ones when the time comes by reducing the stress or uncertainty. After all, this is your Estate and wealth to do with as you see fit and their focus should be on carrying out your final wishes!

13. Failing to include your digital assets in your Will

One of the newest and sadly rapidly growing Estate Planning mistakes we see is a failure to include your digital assets in your Estate Plan.

It’s incredible to think that nowadays, your assets don’t just include, property, money in the bank, and physical goods, but your digital accounts and online purchases, such as music, photographs, or websites, also form part of your possessions and can disappear into the void if you don’t account for them in your Will.

Things like emails and social media accounts also form part of your digital assets legacy – do you want the information destroyed, protected, and do you need to make passwords available to your Executors? They are all assets that will only grow bigger with time and technology advancements, so writing a Will helps protect them.

14. Failing to provide for the care of your pets

We are a nation of animal lovers, so it is often surprising to Estate Planning mistakes about the provision for any pets who survive their owners.

You can stipulate in your Will who you want to look after your pets and any financial allowances you want to make available for their care and upkeep. We would of course always recommend that you ask that person if they are happy to undertake this duty at your end of life!

While there are cases of animals who have inherited entire fortunes through an owner’s Will, it is more common to choose someone to look after them and put some money aside to feed them and look after their health. However, that is your choice!

15. Failing to minimise your Estate’s Inheritance Tax liability

One of the most frustrating Estate Planning mistakes we see is a failure to mitigate unnecessary taxation against an Estate. We have seen multiple cases where hundreds of thousands of pounds as been paid to HMRC in Estate Taxes, nearly all of which could have been legitimately avoided with the right professional advice and true Estate Planning.

The amount of Inheritance Tax charged against your Estate will depend on how much you have and who you leave it to. Anything left to your spouse or civil partner will be automatically exempt from Inheritance Tax.

Using the Residential Nil Rate Band Allowance means leaving property to your children and grandchildren is also likely to generate a lower Inheritance Tax bill than leaving it to others. However, without effective Inheritance Tax Planning, you could well be kicking the Inheritance Tax problem down the line to a younger generation. For example, your adult children may have an Inheritance Tax issue of their own and your generous bequest could simply be inflating their problem!

Creating the right kind of Trusts within your Will for the Inheritance to pass down in a more tax-efficient way can easily mitigate this problem for generations to come. Our Estate Planning Webinars go into more detail on the topic of Trusts.

16. Failing to have Power of Attorney

A Lasting Power of Attorney (LPA) is currently one of the most important documents you could ever create as it is the only way to ensure your health and assets can be managed how you would want them to be, should you lose capacity during your lifetime.

Think of having a valid Lasting Power of Attorney (LPA) as being like having a home insurance policy in place. You hope you’ll never need to use it, but the fact that it is there in advance and ready to use should a fateful day come, is both comforting and reassuring. The only difference is, unlike a home insurance policy, you only pay for your LPA once!

Too many people are ill-informed about LPAs or find out about them too late, leading to potentially one of the most serious Estate Planning mistakes that can have major life-changing impacts on both you and your loved ones.

There are two types of Lasting Power of Attorney: Property and Affairs, and Health and Welfare. A Property and Affairs Lasting Power of Attorney allows elected Attorneys to deal with the financial aspects of the Donor’s Estate, whereas the Health and Welfare Lasting Power of Attorney allows your Attorneys to deal with your health and care decisions.

It is an incredibly sad fact that one person in the UK develops dementia every three minutes.

From the age of 18, we are treated by the law as adults. If you have an accident or illness that suddenly prevents you from having the mental capacity to make your own decisions, control does not automatically pass to your next of kin, as many people mistakenly believe.

Unless you have a Lasting Power of Attorney in place, your loved ones will not be able to act on your behalf and will potentially be prevented from carrying out your wishes about your care and medical treatment?

Should you need care, the local authority could decide which care home you go into, while taking control of your finances to help fund your care fees. Your spouse, partner, or family will have no say in the matter, they cannot demand you are moved to a different care home if they are unhappy with the level of care you are receiving. All they can do is request a move.

17. Failing to get professional advice

Estate Planning is a complex process and far too many Estate Planning mistakes occur when people fail to take the right professional advice and guidance or attempt to do their own end-of-life Estate Planning.

There are many factors to consider when creating your Estate Plan, especially where there are likely to be Inheritance Tax issues and liabilities. You can legally draft your own Will in the UK but there are many steps to ensure it is legal and valid and DIY Wills are far more likely to be contested through the courts.

The safest way to draft your own Will is by using an Online Will Writing Service like ours. We have worked with our expert legal advisers to make sure that our Wills comply fully with the legal requirements of England & Wales.

Most solicitors use a standard Will template to take your instructions. The Redwood Online Wills software ensures we create a fully personalised Will for you.

You must be ‘of sound mind’ and aged 18 years or over. You must be able to understand what is in your Will and you must be making the Will voluntarily. For a Will to be legally binding, you must sign it after completion in the presence of two witnesses (who cannot benefit from your Will). Your witnesses must add their own signatures.

Contact Redwood Financial for Estate Planning

At Redwood, we offer FREE professional Estate Planning advice through our Online Wills, Trusts & Estate Planning Webinar, as well as a complimentary Will Review Service for those who need to have their existing documents reviewed and updated.

Jasmine Lambert Will Writer in Eastleigh
Jasmine Lambert
Jasmine is the Managing Director and Senior Financial Planner at Redwood Financial. She helps clients manage and grow their wealth and protect their estate. Jasmine also provides expert advice in our FREE Redwood Webinars, where you can learn more about Wills, Trusts and Estate Planning.
Redwood Financial is one of the south’s leading Investments, Pensions, Wills, Trusts & Estate Planning providers and we are dedicated to helping families to grow, protect and enjoy their wealth. With our unrivalled knowledge of Estate Planning, Lasting Powers of Attorney, Probate, Pensions, Savings & Investments, we can advise on any situation.
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