Estate Planning Red Flags

Estate planning is an ongoing process that should adjust as a client’s life, assets, and goals change. 

For financial planners, regular reviews of clients’ estate plans are essential for spotting red flags that could create legal, financial, or family complications in the future.

Below are key areas every financial planner should review when evaluating a client’s estate plan.

1. Life Events That Should Trigger an Estate Plan Review

Certain life changes should automatically trigger a full review of a client’s estate plan to avoid unintended consequences, including:

• Marriage or remarriage

• Divorce or separation

• Birth or adoption of a child

• Death, disability or chronic illness of a spouse or beneficiary

• Major changes in income or net worth

• Starting or selling a business

• Moving to a new state

• Starting a new job with heightened risk from lawsuits

• Substantial inheritance, winnings or awards

  
  

2. Asset Titling and Beneficiary Designation Mismatches

One of the most common estate planning issues occurs when legal documents say one thing, but account titles or beneficiary forms say another. Account titles, beneficiary forms and other contractual agreements typically supersede a Will or Trust.  These mismatches often occur on:

• Retirement accounts

• Life insurance policies

• Bank accounts

• Real estate titles

• Buy-Sell agreements

Even a single outdated designation can significantly impact how assets are distributed.

3. Risks of DIY Estate Documents

Many clients rely on online templates or do-it-yourself estate planning tools. Though convenient, these documents often fail to account for state laws, complex family situations, or coordinated asset planning.

Common risks include:

• Generic language that doesn’t comport with certain important state laws

• Missing terms for blended families or dependents with special needs

• Sole reliance on beneficiary forms which are inadequate to provide a clear method for payment of final debts and expenses

• Documents not signed or witnessed correctly, or that are ambiguous, such as a Codicil to a Will

• Unclear instructions, like who receives a deceased beneficiary’s share of the estate, that could cause confusion

DIY documents may look complete on the surface, but can create serious issues later on.

Practical Checklist for Financial Planners

During reviews, it can help to run through a checklist with clients:

• Any major life changes since the last update?

• Are beneficiary designations current?

• Do asset titles match the estate plan?

• Are all documents properly signed, witnessed, and prepared in accordance with current state law?

• Has the plan been reviewed in the last 3 to 5 years?

  
  

Keeping Estate Plans Aligned and Up to Date

Estate plans work best when they are reviewed regularly and systematically. Even small oversights, like outdated beneficiary designations, executor or agency appointments and unclear instruction, can lead to serious unintended consequences.

For financial planners, regular reviews help to keep estate plans current by identifying changes and ensuring each client’s plan still reflects their current life and goals.

At Cook Tillman Law Group, we help financial planners and clients keep estate plans up to date and legally sound.

Need help? Call us at (615) 370-2444 or visit our website to schedule a consultation today.