The families who come in with the most organized estate planning folders sometimes have the most exposure. A signed will, a fully drafted trust, and years of careful document management can still leave assets going to the wrong person or generate a tax bill that didn't have to exist if the follow-through work was never done.

Three mistakes show up more than any others, and all three tend to go unnoticed for years.

The families who come in with the most organized estate planning folders sometimes have the most exposure. A signed will, a fully drafted trust, and years of careful document management can still leave assets going to the wrong person or generate a tax bill that didn't have to exist if the follow-through work was never done.

Three mistakes show up more than any others, and all three tend to go unnoticed for years.

The first involves adding a child to a home's deed to avoid probate. It's a common move, and it often accomplishes what it's intended to do. The unintended consequence is losing what's called a step-up in cost basis. Cost basis is simply what you paid for an asset. If a parent bought a home thirty years ago for $50,000 and it's now worth $300,000, a $250,000 gain is sitting in that property. By adding a child to the deed, the child assumes the original purchase price as their cost basis. When the parent passes and the child eventually sells, a $250,000 capital gain becomes taxable. Had the home passed through the estate properly via a transfer-on-death deed or a named beneficiary in an estate planning document, the child would have inherited the asset at its current market value, and under current tax law, the gain would have been wiped away entirely. One document decision, one very different tax outcome.

The second mistake is a beneficiary designation that was never updated after a major life change. Retirement accounts and life insurance policies pass according to whatever name is listed on the beneficiary form, regardless of what a will or trust says. A man well into his second marriage had updated his will, his trust, and every account he knew about. An old 401(k) from the beginning of his career had never made it onto the list. His first wife was still named. When he passed, those assets went to her, and the will had no bearing on the outcome. Keeping beneficiary designations current across every retirement account and insurance policy is the lowest-cost, highest-impact piece of estate planning maintenance a family can do, and it gets skipped more than most people expect.

The third is a trust that controls nothing. A trust only governs assets that are titled in its name or that name it as a beneficiary. The document itself does nothing on its own. Clients sometimes come in with a trust created a few years earlier, confident it's handling their estate. When asked what the trust owns, they're not sure. Bank accounts still held individually, real estate never transferred, investment accounts never retitled, all of it sits outside the trust when it counts. Creating the document is the first step. Transferring and retitling assets is what makes the trust functional.

Estate planning is a system where wills, trusts, beneficiary designations, and property titles all need to work together. When one piece of a family's life changes, the other pieces should be reviewed alongside it. A periodic review catches the kind of gaps that are easy to fix in advance and expensive to untangle later.

If you'd like to walk through your current plan with an advisor, Summit offers a complimentary introductory conversation. The full episode is on our YouTube channel and covers each of these three examples in detail.