Planner Beware

Sensing trouble up ahead, estate planning attorney Ronald Pohl of The Pohl Law Group repeated the question several times to his client: Are you sure your only daughter can manage your estate when you’re gone?

“And the client  said, ‘Well, she has some issues, but I think she will step up to the plate and handle things fine,’” Pohl recalls. 

Pohl’s hunch was correct. Soon after the client passed away, the client’s landlord called the attorney with shocking news: The heir had been running through the hallway naked. She’d also refused to take precautions when shipping the rare and delicate cello she’d inherited. The chaos reached a point where Pohl’s firm resigned as counsel.

“That’s an example of a client who is not being honest with themselves when choosing the fiduciary to administer the estate in the proper fashion,” says Pohl. 

Estate planning mistakes are, attorneys say, unfortunately all too common. Here are some of the top blunders they see:

Failure to disclose all the facts. “One of the most important things for an [initial] client meeting with an attorney is to be completely honest about their family circumstances, their assets and issues,” says Pohl, who’s seen clients, often out of embarrassment, try to hide a problem with a family member or a child born out of wedlock, for example. “The worst nightmare for an estate planning attorney is having a great meeting with your couple and then getting a call after, saying, ‘I need to make some changes.’ And then, all of a sudden, you’re in conflict because the husband or wife is disclosing something to you that the other one doesn’t know.”

Leaving everything to your children equally. “You need to understand the practicality of who needs what and how each child is living,” says Regina Kiperman of RK Law. “If you have three kids and one of them lives in the house with you, and you left everything to the three kids equally … you’re asking the kids to have a problem.”

Using AI to create your will. If you rely on ChatGPT or a similar app, you’re likely to miss critical clauses, Kiperman says: “Everyone thinks they can make a will now, but it’s not true.”

Not funding your trust. If your will stipulates that your assets will go to your trust, and you don’t fund it, the cost of probate and moving your money from the will to the trust, then to the heirs, skyrockets.

Disinheriting someone the wrong way. A provision in your will that merely states that the child you’ve shunned gets nothing will be useless if he challenges the documents, says Kiperman. “You’re just inviting litigation. If you’re really going to disinherit someone and you put an in terrorem—no-contest—clause in the will, you have to give them incentive to not challenge the will, and the incentive has to be big enough. Let’s say you have $10 million. You say, ‘I’ll give $1 million to this kid, but if you contest it, then you don’t get the $1 million.’ That’s an incentive.”

Not identifying your next of kin. If you assume you have no family and die without a will, the executor may think they need to search for distant relatives and determine who gets what. “You need to do due diligence,” Kiperman says. “You need to look for unknowns.”

Leaving a percentage of your assets to charity. Instead, bequeath a fixed amount to the charity. “Then that nonprofit will just sign a release,” says Kiperman. “If you leave a percentage of your estate, then [the executor] has to get a No Objection Certificate from the state attorney general’s office, and that could take forever.”

Making one or more of these mistakes means “your executor is in for a ride,” says Kiperman. “If it [goes to] litigation, not only is it delaying when people can get their money, but the estate is also getting sucked out of money. So depending on the severity of the mistake, you are potentially severely delaying the distribution or minimizing how much money your heirs are going to get.”

It’s never too early to make a will; you can revise it as you accumulate wealth or circumstances change. “Generally speaking, once you get married, you absolutely should have a will, and definitely, once you have a child, because you need to appoint a guardian,” says Pohl. “That’s mandatory.”

There’s no such thing as a simple will, Kiperman adds. “You have to look at estate planning as a holistic thing. It’s something you do to prepare for the next stage of life.”

“Everyone thinks [AI services] can make a will now, but it’s not true.” —Regina Kiperman