Estate planning mistakes are more common than most people realize, and the consequences rarely show up while you can still fix them. The problems surface after you pass away or become incapacitated, when your family is already dealing with grief, stress, and time-sensitive legal and financial decisions.
The good news is that the most expensive estate planning mistakes are also the most preventable. They are not obscure legal technicalities. They are practical oversights that happen because life gets busy, circumstances change, and no one reminded you to update your plan.
At Jeffrey Burr Law Firm, we have spent more than 40 years helping Las Vegas and Henderson families build estate plans that actually work. Along the way, we have seen the same mistakes come up over and over again. Here are the five that cause the most damage, and how to avoid them.
This is the single most common estate planning mistake we see, and it is one of the most costly. A revocable living trust only controls assets that have been retitled into the trust’s name. If you create a trust, but never transfer your bank accounts, investment accounts, and real estate into it, those assets will go through probate as if the trust did not exist.
Probate in Nevada can take six months to a year or longer, costs thousands of dollars in legal and court fees, and becomes a matter of public record. The entire point of a living trust is to avoid that process, which requires that the trust be properly funded.
Funding a trust means changing the title on your accounts and property so that they are owned by the trust rather than by you individually. For real estate, this typically requires recording a new deed. For bank and brokerage accounts, it means updating the account registration. It is not complicated, but it requires follow-through after the trust documents are signed.
If you created a trust years ago, take the time to verify that your assets are actually titled in the trust’s name. If you have acquired new property, opened new accounts, or refinanced your home since the trust was created, those assets may not be included. A quick review with your attorney can identify and fix any gaps.
Many of your most valuable assets do not pass through your will or trust at all. Life insurance policies, retirement accounts like 401(k)s and IRAs, and payable-on-death bank accounts all transfer directly to whoever is listed as the beneficiary on file with the financial institution. These designations override whatever your will or trust says.
This creates a serious problem when beneficiary designations are outdated. The most common scenario we encounter is a divorced person who never updated the beneficiary on their 401(k) or life insurance policy. Even though the divorce decree may say the ex-spouse gets nothing, the financial institution will pay whoever is listed on their form. Your estate plan documents cannot override that.
Other common beneficiary designation mistakes include naming a minor child as a direct beneficiary, which triggers a court-supervised guardianship of the funds. Another is failing to name a contingent beneficiary, which sends the asset through probate if your primary beneficiary passes away before you. And another is listing your estate as the beneficiary, which unnecessarily subjects the asset to probate and potential creditor claims.
Review your beneficiary designations every time you experience a major life event: marriage, divorce, the birth of a child, or a death in the family. Make sure every designation aligns with your overall estate plan. If you have a trust, your attorney may recommend naming the trust as the beneficiary on certain accounts so everything flows through one coordinated plan.
Adding a child or family member as a joint owner on your home or bank accounts is one of the most popular do-it-yourself estate planning strategies. It is also one of the most dangerous.
Joint tenancy does avoid probate when the first owner dies, because the surviving joint tenant automatically becomes the sole owner. But the unintended consequences can be severe.
When you add someone as a joint owner on your home, you are making a gift of a portion of the property. If the value exceeds the annual gift tax exclusion, you may be required to file a gift tax return. More importantly, your co-owner’s creditors, lawsuits, divorces, and financial problems can now affect your property. If your child is sued or goes through a divorce, a court could order the sale of property you never intended to put at risk.
Joint tenancy also creates potential capital gains tax problems. When property passes through an estate plan at death, the beneficiary receives a stepped-up cost basis, which can eliminate capital gains tax on decades of appreciation. When you add a joint owner during your lifetime, they receive your original cost basis instead, which could mean a significantly larger tax bill when the property is eventually sold.
A revocable living trust accomplishes the same goal of avoiding probate without any of these risks. It keeps the property in your name and under your control during your lifetime, and it passes to your beneficiaries with the full stepped-up basis at your death.
Most people think of estate planning as planning for what happens after death. But some of the most important estate planning documents are the ones that protect you while you are still alive.
A durable power of attorney allows someone you trust to manage your financial affairs if you become unable to do so yourself. A healthcare power of attorney and advance directive allow someone to make medical decisions on your behalf and specify your wishes for end-of-life care. Without these documents, your family has no legal authority to act on your behalf.
If you become incapacitated without these documents in place, your family’s only option is to petition the court for a guardianship. In Clark County, this process typically takes three to six months, costs $5,000 to $15,000 or more in legal fees, and requires ongoing court supervision. During that time, your bills may go unpaid, your accounts may be frozen, and medical decisions may be delayed.
Incapacity planning is especially important if you are a business owner, have complex financial holdings, or have specific wishes about medical treatment. These documents should be part of every estate plan, regardless of your age or health. The time to put them in place is while you have full mental capacity, not after a medical crisis has already occurred.
An estate plan is not a one-time project. It is a living set of documents that needs to reflect your current life, your current wishes, and current law. One of the most expensive mistakes is creating a plan and never looking at it again.
Life changes constantly. You get married, have children, get divorced, remarry. You move to a different state. You acquire new assets, sell a business, or inherit property. Your children grow up and start families of their own. Each of these events can affect how your estate plan should be structured.
The law changes, too. Federal estate tax exemptions have shifted dramatically over the past decade, and the current elevated exemption is scheduled to change. Nevada’s own trust and estate laws are updated periodically. An estate plan drafted ten years ago may not take advantage of current opportunities or may rely on provisions that no longer work as intended.
A good rule of thumb is to review your estate plan every three to five years, or whenever you experience a major life event. This review does not necessarily mean rewriting everything. Often it means confirming that your named agents, trustees, and beneficiaries are still the right people, that your assets are properly titled, and that your plan still reflects your goals. Your attorney can identify whether any updates are needed and handle them efficiently.
If any of these mistakes sound familiar, you are not alone. The vast majority of estate plans we review have at least one of these issues. The important thing is to address them now, while you have the ability to make changes.
Start by locating your existing estate planning documents. If you have a trust, check whether your assets are actually titled in the trust’s name. Review the beneficiary designations on all of your insurance policies, retirement accounts, and bank accounts. Make sure your power of attorney and healthcare directive are current and reflect Nevada law if you live in Nevada.
If your estate plan is more than five years old, or if you have experienced any major life changes since it was created, schedule a review with an estate planning attorney. A comprehensive review takes far less time and costs far less money than the problems these mistakes create after it is too late to fix them.
The most common estate planning mistake is creating a trust, but failing to fund it. A trust only controls assets that have been retitled into the trust’s name. If your bank accounts, investment accounts, and real estate are still titled in your individual name, they will go through probate regardless of what your trust says.
Yes. Beneficiary designations on life insurance policies, retirement accounts, and payable-on-death accounts take precedence over your will or trust. If your beneficiary designation names your ex-spouse, but your trust says otherwise, the financial institution will pay the person listed on their form. This is why it is critical to review and update all beneficiary designations as part of your estate plan.
You should review your estate plan every three to five years, or whenever you experience a major life event such as a marriage, divorce, birth of a child, death of a beneficiary, move to a new state, or significant change in your financial situation. Regular reviews catch outdated provisions before they become costly problems.
In most cases, yes. Adding a child as a joint owner exposes the property to their creditors, lawsuits, and divorce proceedings. It can also create gift tax obligations and eliminate the stepped-up cost basis your child would otherwise receive if the property passed through your estate plan at death. A revocable living trust is almost always a better approach.
If you become incapacitated without a durable power of attorney, your family must petition the court for a legal guardianship to manage your financial and personal affairs. In Clark County, Nevada, this process typically costs $5,000 to $15,000 in legal fees, takes three to six months, and requires ongoing court oversight. A power of attorney prevents this entirely.
The attorneys at Jeffrey Burr Law Firm have been helping Las Vegas and Henderson families avoid these mistakes for more than 40 years. Whether you need a new estate plan or want to review an existing one, we can identify potential issues and make sure your plan works the way you intend. Call our Las Vegas office or our Henderson office today to schedule a consultation.
This page is for general informational purposes only and does not constitute legal advice. Laws change; consult a licensed Nevada attorney for advice specific to your situation.
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