Common Estate Planning Mistakes and How to Avoid Them

A solid estate plan is your best bet for ensuring that your finances, real property, and personal wishes are handled smoothly and accurately upon your death or incapacity. Yet even the most well-intentioned individuals can make critical errors that may lead to family disputes, extra costs, or unintended beneficiaries. This guide examines common estate planning mistakes that arise in Queensland, with practical strategies to avoid them and keep your legacy intact.

Introduction

Why Mistakes Occur in Estate Planning

Estate planning mistakes often happen for these reasons:

• Procrastination: People delay creating or updating key documents until too late.
• Lack of Clarity: Misunderstandings about how assets pass outside a will (e.g., superannuation).
• Incomplete Strategies: Overlooking powers of attorney, guardianship instructions, or special asset classes like cryptocurrency.
• DIY Pitfalls: Relying on will kits or informal advice can cause omissions or invalid formalities.

“One small oversight—like failing to update a will post-divorce—can derail an entire estate plan, forcing loved ones into a tangle of legal disputes.”
— Wills & Estates Lawyer, QEL

The Stakes of Getting It Wrong

When estate plans fail, families endure:

• Delayed Distribution: Disputes or lack of clarity trigger court processes.
• Higher Legal Costs: Contesting or fixing poorly drafted documents is expensive.
• Emotional Strain: Loved ones face uncertainty or arguments, compounded by grief.

Mistake #1: Failing to Create or Update a Will

Effects of Dying Intestate

Intestacy arises when you leave no valid will. Queensland’s Succession Act 1981 then dictates distribution, typically prioritising spouses and children. This might ignore special bequests or non-traditional relationships. Also:

• No Executor Named: The court appoints an administrator, adding expense and delay.
• Family Tensions: Relatives unsure who’s in charge or entitled to specific items.

Not Reviewing a Will After Life Changes

Major milestones like marriage, divorce, new children, or acquiring significant property can render an older will outdated:

• Marriage can revoke a prior will unless it explicitly contemplates the marriage.
• Divorce often terminates gifts or executor roles for the ex-spouse but leaves other will parts intact—possibly causing confusion.

Solution: Revisit and update your will after each major event. This simple step spares loved ones from dealing with an irrelevant or partially invalid will.

“Your will isn’t a ‘write once, ignore forever’ document. It should evolve with your life.”
— Estate Planning Advisor, QEL

Mistake #2: Ignoring Superannuation Nominations

Super Is (Usually) Outside the Will

Many assume superannuation automatically falls under their will. In fact:

• Super funds generally pay death benefits directly to a nominated beneficiary or to the estate if you named your legal personal representative (LPR).
• If no valid binding death benefit nomination (BDBN) exists, trustees can decide on an eligible dependant or pay it to the estate at their discretion.

Expired or Invalid Nominations

Some BDBNs expire after 3 years, or the fund might have changed its rules:

• A lapsed or incorrectly witnessed nomination leaves distribution to trustee discretion.
• Surviving family can be blindsided if they expected super to go one way but the trustee decides differently.

Solution: Regularly confirm your super fund rules, keep BDBNs updated, and align them with your broader estate plan. If you want super included in the estate, specify your will’s approach and name the LPR as your beneficiary.

Mistake #3: Overlooking Powers of Attorney and Advance Health Directives

Enduring Power of Attorney (EPA)

An EPA remains valid even if you lose capacity. Not setting one up means:

• No one can legally manage your finances, property, or personal/health decisions if you become incapacitated, unless they pursue QCAT or court orders—a lengthy process.

Solution: Establish an EPA while mentally sound. Choose a trustworthy attorney for finances, and optionally one for personal/health matters too. This ensures continuity if illness or accidents strike.

Advance Health Directive (AHD)

An AHD records your treatment preferences:

• Without it, family or your attorney might guess what you’d want for life support, resuscitation, or major surgeries.
• This can lead to internal family conflict or contradictory medical decisions.

Solution: Create an AHD detailing your stance on resuscitation, life support, or palliative measures. It provides clarity, preventing confusion and guilt for family forced to make tough calls.

Mistake #4: Relying on Informal or DIY Methods

Unwitnessed or Vaguely Worded Documents

Informal wills might be accepted if proven the testator intended them as final. However, the risk is high:

• Courts scrutinise them heavily, incurring legal costs if disputed.
• Ambiguous phrases spark beneficiary conflicts over interpretation.

Online Will Kits

While some straightforward estates may handle these kits fine, any complexity—like multiple properties, blended families, or business interests—can lead to:

• Missing essential clauses.
• Failure to address tax or testamentary trusts.
• Overlooking guardianship or fallback plans if beneficiaries predecease you.

Solution: Engage a professional for at least a final review if you choose a kit. For larger or complex estates, a bespoke legal approach is safer.

“A small cost for professional advice now can save thousands in court battles later.”
— Probate Specialist, QEL

Mistake #5: Failing to Discuss Estate Plans with Family

Surprises Cause Disputes

A child omitted unexpectedly or a friend receiving a large bequest might trigger shock and challenges to the will. A spouse might not know you wanted different funeral arrangements.

Solution: Though some prefer secrecy, a discreet conversation—at least with key family members or an executor—can smooth acceptance. If not revealing details, consider a letter of explanation stored with your will.

Clarifying Funeral Preferences

Many wills include funeral instructions. However, family can override them if it’s not legally binding. Better to:

• Communicate your funeral or memorial desires to likely organisers.
• Provide some funds or insurance to cover costs if you have specific wishes.

(Tip: Ensure your executor knows if you want cremation or burial, as immediate decisions are needed after death.)

Mistake #6: Neglecting Digital Assets and Online Accounts

Potentially Lost Wealth

Crypto wallets, domain names, blogs—these can hold real monetary or sentimental value. If no one knows how to access them, they vanish upon your death.

Access Barriers

Online providers rarely grant logins without legal processes or prior instructions. If you didn’t arrange for a digital legacy, the executor might be stuck.

Solution: Maintain a secure list of digital assets, including passwords or instructions for retrieving them. Clarify who inherits intangible assets like online businesses or NFT collections.

“A single lost password to a crypto wallet can mean thousands of dollars are gone forever.” — Digital Estate Consultant, QEL

Table: Six Common Mistakes & Practical Solutions

Minimising Tax and CGT Oversights

Poorly Structured Testamentary Trusts

A testamentary trust can provide asset protection and tax benefits for beneficiaries. If not included or if incorrectly drafted:

• Children might pay higher taxes on investment income compared to distributions through a testamentary trust.
• Asset protection might be weaker if beneficiaries face business or marital risks.

Solution: Consider testamentary trusts if you want flexible, tax-effective distributions—particularly for minors or to guard assets from possible claims.

Not Factoring CGT on Property or Shares

Some heirs prefer to sell property inherited. If the property wasn’t your principal residence or it’s not sold within a certain timeframe, CGT might apply. Without planning, beneficiaries could face unexpected liabilities.

Conclusion

Estate planning is a vital safeguard for you and your family’s future, but it’s vulnerable to avoidable mistakes that undermine your efforts. From ensuring you have an up-to-date will and documented super nominations, to integrating digital assets and clarifying intentions with family, a few proactive steps will help you dodge pitfalls. When in doubt, professional legal advice can clarify complexities—like blended families, large estates, or overseas property—and keep your plan airtight.

Key Takeaways:

1. Regularly Review: Life changes fast. Keep your will, super nominations, and powers of attorney current.
2. Don’t Overlook superannuation, digital assets, or powers of attorney.
3. Communicate: Let your executor or close relatives know where documents are and any special funeral or distribution wishes.
4. Professional Guidance: For complex assets, testamentary trusts, or large estates, a solicitor’s input can spare confusion and cost later.

By avoiding common estate planning mistakes, you ensure your wishes remain paramount, your loved ones are spared undue burdens, and your legacy stands secure.