Estate planning is not one size fits all, and every Michigan family’s situation is unique. However, many of the same costly mistakes appear time and time again, especially when individuals attempt to handle their estate planning without proper guidance or fail to maintain their plan over time. Most estate planning errors fall into a handful of common and avoidable categories. With thoughtful preparation and ongoing review, these mistakes can be prevented, helping ensure your assets are protected and your wishes are carried out exactly as intended.
Not Understanding Your Estate Plan
One of the most common estate planning mistakes in Michigan is signing documents you do not fully understand. Many people assume that once their attorney drafts the documents, everything is automatically handled. While working with an experienced estate planning attorney is essential, your plan only works if it is properly implemented, and that requires your participation.
For example, if you create a Revocable Living Trust to avoid probate in Michigan, the trust must be funded. That means retitling assets such as your home and bank accounts into the name of the trust. If you do not complete this step, your trust may not accomplish what it was designed to do.
A major reason estate plans fail is not because they were poorly drafted, but because they were never fully understood or carried out.
Your attorney should clearly explain
- What each document does
- How the documents work together
- What steps you must take after signing
- How your plan affects your loved ones
You do not need to understand every technical legal detail. However, you should understand the fundamentals and how your plan functions in real life.
Not Updating Beneficiary Designations
One of the most overlooked estate planning mistakes in Michigan is failing to update your beneficiary designations. Certain assets pass directly to a named beneficiary and do not follow the instructions in your Will. These commonly include life insurance policies, retirement accounts such as IRAs and 401(k)s, and annuities. No matter what your Will says, these assets will be distributed to the person listed on the beneficiary form.
If those designations are outdated, the consequences can be serious. An account could pass to an ex-spouse, a deceased individual, or someone you no longer intend to benefit. At the same time, you could unintentionally leave out a child or grandchild who was not yet born or not yet part of your family when the account was opened.
Many people assume their estate plan controls everything. In reality, beneficiary designations override your Will. That makes them one of the most important and most frequently neglected parts of your plan.
Not Funding Your Living Trust
Many Michigan estate plans include a Revocable Living Trust designed to help families avoid probate. However, simply signing the trust agreement is not enough. One of the biggest mistakes people make is failing to fund their trust after it has been created.
Funding a trust means transferring ownership of your assets into the name of the trust. If an asset is not titled in the name of the trust, it may still have to go through probate, defeating one of the primary reasons the trust was created in the first place.
For example, if you have a bank account in your individual name, you must contact the bank and retitle the account in the name of your trust. The same principle applies to other assets.
Some transfers are straightforward. Personal property without formal title, such as clothing, jewelry, and household items, is typically transferred using assignment language within the trust documents. Real estate, however, requires a new deed transferring ownership from you individually to your trust. In most cases, your attorney will prepare and record this deed for you.
Although these steps are not overly complicated, they are often overlooked. When that happens, families may discover after a loved one passes away that certain assets were never placed into the trust and must now go through probate court.
Not Discussing Your Estate Plan With Friends Or Family
Creating an estate plan is an important step. Failing to communicate that plan can create unnecessary confusion and conflict.
Your loved ones do not need to know every detail of your estate plan. However, they should know that you have one, where the documents are located, and who to contact if something happens to you. Without this basic information, even the most carefully prepared plan can be delayed or overlooked.
In some families, having an open conversation about your intentions can significantly reduce the risk of disagreements after your passing. If you anticipate that someone may be unhappy with your decisions, addressing expectations while you are alive can prevent misunderstandings later.
It is also important to notify the individuals you have named in key roles, such as Personal Representative under your Will or Trustee of your Trust. These individuals should understand their responsibilities and know where to access the necessary documents when the time comes.
Not Having Or Updating Medical Or Financial Powers Of Attorney
A complete estate plan does not just address what happens after death. It must also plan for incapacity during your lifetime.
Medical and Financial Powers of Attorney, often referred to as advance directives, allow you to name trusted individuals to make decisions on your behalf if you are unable to do so. In Michigan, these documents are critical to avoiding court involvement if you become incapacitated.
Without properly executed documents in place, your loved ones may be forced to petition the probate court to be appointed as your guardian or conservator. This process can be time-consuming, expensive, and emotionally draining at a time when your family is already under stress.
Even if you already have these documents, they should be reviewed periodically. Relationships change. Laws evolve. The person you named years ago may no longer be the best choice to act on your behalf. In addition, your preferences regarding medical treatment or financial management may have shifted over time.
Not Updating Your Estate Plan
One of the most common mistakes Michigan families make is creating an estate plan and then never looking at it again. An estate plan that worked perfectly five or ten years ago may no longer reflect your current wishes, family structure, or financial situation.
Certain life events should immediately prompt a review of your plan, including
- Marriage
- Divorce
- The birth or adoption of a child
- A death in the family
- Purchasing new property or significant assets
- Substantial changes in your net worth
In addition, changes in state or federal law may affect how your plan operates. Even if nothing major has occurred, it is wise to review your estate plan every few years to ensure it still aligns with your goals.