Creating an estate plan is one of the most important steps you can take to protect your assets, provide for your loved ones, and help your wishes be carried out. However, even a well-designed plan can fall short if critical details are overlooked.

Whether you’re creating an estate plan for the first time or reviewing an existing one, avoiding these five common estate planning mistakes can help protect your legacy and reduce unintended consequences.

1. Overlooking Beneficiary Designations

Your will doesn’t necessarily control how all your assets are distributed. Retirement accounts, life insurance policies, annuities, and certain bank and investment accounts generally pass directly to the beneficiaries named on those accounts, regardless of what your will says.

Suppose you named your spouse as the beneficiary of your retirement account years ago but have since divorced and remarried. If you haven’t updated the designation, your former spouse might receive those assets instead of your current spouse or children. The outcome depends on applicable law and the type of account.

Review beneficiary designations regularly, particularly after major life events such as marriage, divorce, the birth of a child, or the death of a loved one. Also, consider naming contingent beneficiaries in case your primary beneficiaries predecease you.

2. Establishing A Trust But Neglecting To Properly Fund It

Trusts can serve several purposes, from controlling how assets are distributed to protecting beneficiaries and potentially reducing estate taxes. A revocable living trust, for example, can help your estate avoid probate, maintain privacy, and provide for the management of assets if you become incapacitated.

However, simply signing trust documents isn’t enough. To accomplish its intended purposes, a trust generally must be properly funded. This means transferring ownership of designated assets to the trust or, when appropriate, arranging for assets to pass to it through beneficiary designations.

3. Failing To Consider How Assets Are Titled

The way you hold title to property can significantly affect what happens to it after your death. Various forms of ownership carry different legal, tax, and estate planning consequences.

For instance, property owned jointly with rights of survivorship generally passes automatically to the surviving owner, bypassing probate. By contrast, an interest in property held as tenants in common generally passes according to the deceased owner’s will or applicable intestacy laws.

Adding an adult child as a joint owner of a home or financial account might seem like a convenient way to simplify an inheritance. However, doing so can create unintended gift tax consequences, expose the property to the child’s creditors, and complicate your estate plan.

Review how your real estate, bank accounts, and other significant assets are titled. Make sure your ownership arrangements support your estate planning objectives rather than inadvertently overriding them.

4. Not Coordinating Your Estate Planning Documents & Decisions

An effective estate plan involves more than a will or trust. It may also include beneficiary designations, powers of attorney, health care directives, and other financial arrangements. These components should work together to accomplish your goals.

For example, leaving substantial assets to a trust for your children may provide valuable protections, but if your retirement accounts name the children directly as beneficiaries, those assets generally will bypass the trust, potentially defeating your intentions.

Tax considerations also play an important role. Traditional IRAs and other tax-deferred retirement accounts can create income for beneficiaries that’s taxed at their ordinary income rates, while appreciated assets held in a taxable account generally receive more favorable tax treatment if sold.

Coordinating beneficiary designations, trust provisions, and distribution strategies can help manage taxes and preserve more wealth for your heirs. The key is to evaluate your estate plan as a whole, rather than making decisions about individual assets or documents in isolation.

5. Allowing Your Estate Plan To Become Outdated

Marriage, divorce, births, deaths, changes in family relationships, and significant increases or decreases in wealth can all affect your estate plan. And changes in federal or state tax laws may also create opportunities or require adjustments.

Review your estate plan every three to five years — or sooner if you experience a significant life event or there’s a major tax law change. We can help identify potential weaknesses in your estate plan and determine whether revisions are needed to help you achieve your goals.