Estate planning is about more than just a Will—it’s about protecting your loved ones, ensuring your wishes are honoured, and shielding your legacy from unnecessary risks. Yet, many people unknowingly make common mistakes which in the end cost their estates thousands of dollars to rectify. This article will outline 6 key estate planning errors (6 is my lucky number) to avoid and provide solutions for you to think about when you are drafting your estate plan.
Summary
Avoid these estate planning mistakes to protect your loved ones and ensure your wishes are fulfilled:
- Update your estate plan regularly, especially after life changes like marriage, divorce, or a new child.
- Include superannuation in your estate plan by maintaining up-to-date binding death benefit nominations.
- Use testamentary trusts to protect assets and reduce tax burdens for beneficiaries.
- Choose a skilled and trustworthy executor, or consider a professional for complex situations.
- Plan for incapacity with an Enduring Power of Attorney and Advance Health Directive.
- Avoid DIY wills and seek professional help for legally sound and tailored documents.
This article provides practical tips to help you avoid these pitfalls and safeguard your legacy.
1) Not Keeping Your Estate Plan Updated
Your estate plan should evolve with your life. Major events like marriage, divorce, the birth of a child, or acquiring significant assets often require updates to your will and other documents.
Why It’s a Mistake:
Outdated estate plans can lead to unintended consequences, such as excluding new family members or favouring an ex-partner over a current spouse.
Example:
Sally created her Will in 2005, naming her husband, Tom, as the primary beneficiary of her house, savings, and superannuation. They separated in 2021 and began a lengthy family law process to finalise their divorce. Later in 2021, Sally met Liam, entered a de facto relationship, and intended to leave her assets to him (once her family law matter was finalised).
Unfortunately, Sally unexpectadly passed away before finalising her family law matter or updating her Will. Because Sally’s Will hadn’t been revoked or updated, Tom remained the primary beneficiary and inherited everything. Liam, as her de facto spouse, was left in a difficult position as he was not entitled to anything in Sally’s 2005 Will. His only option was to file a family provision application, an emotionally and financially draining process on him and the Estate.
Solution:
Review your estate plan every 1-3 years or after major life changes. Seek professional advice to ensure your documents reflect your current circumstances. At Jacaranda Law, as part of our service, we provide our clients Estate Planning review checklists so that you can quickly review your estate plan to make sure you are till up to date.
2) Overlooking Superannuation in Estate Planning
Superannuation often represents a significant portion of your wealth, yet many people aren’t aware it doesn’t automatically follow the instructions in their Will. Instead, the benefits are paid in accordance with your binding death benefit nomination (BDBN) or, if no valid nomination exists, it is paid out at the discretion of the superannuation fund Trustee.
Why It’s a Mistake:
Superannuation does not automatically form part of your estate. If you do not have a valid binding death nomination directing the Trustee of your fund to pay your benefits to an eligible beneficiary, the Trustee themselves will decide who receives it. Failing to draft a valid binding death nomination can result in disputes, unintended beneficiaries recieving the benefits, or extra tax being paid.
Example:
Let’s look at Sally’s situation again. Sally had separated from her husband, Tom, and was in the process of finalising her divorce. Tragically, Sally passed away before completing the divorce or revising her estate plan. She had never made a nomination for her superannuation fund, leaving the decision in the hands of the funds Trustee.
The Trustee chose to pay the superannuation death benefit to Sally’s two young children, which seemed reasonable on the surface. However, because Tom (the estranged husband) was the legal guardian of those children, the Trustee gave him control of the funds to manage them on the children’s behalf. This meant Sally’s estranged husband, who she no longer trusted, ended up overseeing a substantial amount of money.
Solution:
Sally could have nominated her estate as the recipient of her superannuation death benefits. She could then direct, in her Will, that those funds be placed in a testamentary trust for her children. A trusted family member—rather than her estranged husband—could have been appointed as the trustee to manage the funds until her children reached a specified age.
This approach would have protected the funds from unwanted control and ensured they were used solely for the children’s benefit.
3) Neglecting to Use Testamentary Discretionary Trusts
A testamentary trust isn’t just a fancy legal concept—it’s a powerful tool which can protect assets for your beneficiaries. Without one, your hard-earned wealth could end up in unintended hands, particularly in situations involving second marriages or blended families.
Example:
After finalising her divorce from Tom, Sally took all the right steps—or so she thought. She drafted a new “basic” Will, leaving her estate to her new spouse, Liam, as the sole beneficiary. Sally wanted Liam to be financially secure, and with good intentions, she left everything to him directly in his name knowing that he would then pass it down to her children once he died.
Tragically, Sally passed away a few years later. Liam inherited her estate, which included her house, savings, and superannuation. After a suitable period of grieving, Liam repartnered and eventually married another woman, Claire. Unfortunately, their marriage didn’t last, and when they seperated, Claire was entitled to a large share of Liam’s assets—including the inheritance Sally had worked so hard to leave for him.
As a result, half of Sally’s legacy ended up in Claire’s hands, rather than being preserved for Liam or Sally’s children.
Solution:
Sally could have used a testamentary trust in her Will to leave her assets to Liam and her Children. By establishing the trust, she could ensure:
- Liam would still benefit from the assets during his lifetime.
- The assets in the trust would have a stronger layer of protection from claims in any future divorce.
- Her children could also be named as beneficiaries, ensuring that the trust could provide for them in the long term.
- Distributions to the children could be mad in a tax efficient manner (up to the adult tax free threshold!)
- Multiple trustees could oversee the trust, balancing Liam’s needs with the long-term protection of the assets for the children.
This approach would have safeguarded Sally’s estate, allowing Liam to enjoy the benefits while providing protection from assets being divided in a subsequent divorce. It also would have ensured the legacy could continue supporting Sally’s children in the future.
At Jacarand Law we know that estate planning is more than just a Will, and so we make sure to advise our clients on suitable strategies specifically tailored to their situation.
4) Choosing the Wrong Executor
Your executor is the person—or people—responsible for carrying out the instructions in your Will. Choosing wisely is critical, as an executor plays a key role in managing your estate. While many people opt for a single executor, appointing more than one can be a smart decision to ensure the role is fulfilled if one is unable or unwilling to act. However, appointing multiple executors comes with its own considerations.
Example:
David appointed his two adult children, Lisa and Ben, as co-executors of his Will. Lisa was a lawyer, and Ben had financial expertise, so David believed they were a strong team. However, after David’s passing, Ben started making decisions independently—such as selling family heirlooms—without consulting Lisa. While executors are required to act jointly, the lack of communication created delays and confusion, ultimately harming the estate.
On the other hand, another of David’s relatives, Sarah, had only appointed one executor, her sister Margaret. When Margaret suffered a serious illness just after Sarah’s passing, she was unable to fulfil her duties, leaving the estate administration in limbo until the court appointed a replacement.
Solution:
Appointing more than one executor can safeguard your estate against situations where one executor is unable or unwilling to act. However, co-executors must be individually trustworthy and able to collaborate effectively to prevent decisions being made unilaterally or disputes between executors. Consider the following:
- Appoint a Backup Executor: Ensure that if one executor is unavailable, the other can step in without delaying the administration of the estate.
- Choose Trusted and Cooperative Individuals: Appoint co-executors who not only have the skills needed but are also likely to work well together. This could mean appointing siblings who have a history of cooperation.
- Discuss Their Roles in Advance: Inform your executors of their responsibilities and emphasise the importance of joint decision-making to avoid conflicts or unilateral actions.
At Jacaranda Law, we advise clients to carefully consider their executor appointments to avoid these pitfalls. A thoughtful choice now can prevent significant headaches for your loved ones later.
5) Failing to Plan for Incapacity
Estate planning isn’t just about distributing your assets after death—it’s about protecting yourself if you’re unable to make decisions.
Example:
Margaret developed dementia without having an Enduring Power of Attorney in place. Her family had to apply for guardianship through the Queensland Civil and Administrative Tribunal, a costly and time-consuming process that caused unnecessary stress.
Lesson:
Planning for incapacity can save your loved ones from legal battles and ensure your preferences are respected.
Solution:
Include an Enduring Power of Attorney and Advance Health Directive in your estate plan. These documents appoint trusted individuals to make financial and medical decisions if you become incapacitated.
6) Relying on DIY Wills
Creating a Will might seem straightforward, and DIY Will kits or online templates are tempting for their low cost and convenience. However, as we say at Jacaranda Law – estate planning is more than just a Will. Often these DIY solutions fail to address individual circumstances, leading to unintended outcomes that can cost your loved ones far more than the money saved on legal fees. A Will is a legal document that must meet specific requirements, and even small errors can render it invalid or open to challenges.
Example 1: The Missing Witnesses
Emma decided to use an online DIY Will kit, filling in all the details herself. She printed the document and signed it but didn’t realise that Wills require two independent witnesses to be legally valid. When Emma passed away, her Will was ruled invalid, and her estate was distributed according to intestacy laws. This meant her estranged brother inherited everything instead of the close friend she had intended to benefit.
Example 2: Ambiguities Create Confusion
Margaret drafted her Will with the help of an online template, leaving “my house at 22 Sunset Avenue” to her nephew, James. However, Margaret owned more than one property at that address. Her primary residence was on Lot 1, but she also owned the vacant adjoining Lot 2, which shared the same address.
After Margaret’s passing, James argued that “my house” referred to both Lot 1 and Lot 2, given they were adjacent and always treated as one property during Margaret’s lifetime. Meanwhile, Margaret’s sister, who was entitled to the residue of the estate, claimed that only Lot 1—the property with the house—should pass to James, leaving Lot 2 as part of the residual estate.
The ambiguity led to a court application under section 33C of the Succession Act 1981 (Qld) to resolve the meaning of “my house at 22 Sunset Avenue” at great cost to the estate and beneficiaries.
Example 3: Overlooking Family Dynamics
Samantha used a DIY Will to leave her estate equally to her two adult children, not accounting for her son’s financial difficulties. After her death, creditors claimed her son’s inheritance to settle his debts, leaving him with nothing. A professionally drafted Will could have included a testamentary trust to protect his share from creditors.
Solution:
You might wonder why it’s worth paying for a professionally drafted Will when a DIY option costs far less. The answer lies in the value of expertise and the cost of mistakes. Fixing issues caused by a poorly drafted Will can cost tens of thousands of dollars in legal fees, far exceeding the initial savings of a DIY kit. Moreover, the emotional toll on your loved ones during an already challenging time is immeasurable. You should consider:
- Engaging a Professional: A solicitor who focuses on estate planning can ensure your Will is legally valid and tailored to your unique circumstances. They’ll also anticipate potential issues, such as challenges to the Will or family disputes.
- Comprehensive Estate Planning: An estate planning lawyer will go beyond drafting a Will to address superannuation, tax planning, testamentary trusts, and enduring powers of attorney.
- Customised Language: Lawyers ensure clarity in your Will to minimise ambiguity and reduce the risk of litigation.
- Regular Reviews: Professionals can remind you to update your Will after major life changes, ensuring it reflects your current wishes.
At Jacaranda Law, we understand that estate planning is more than just a Will. Every day we help clients with drafting appropriate estate plans that suit their needs and protect their loved ones. We would be happy to help you do the same.
Final Thoughts
When it comes to safeguarding your legacy and reducing stress for your loved ones, a professionally drafted estate plan is an investment in your peace of mind. At Jacaranda Law, we take the time to understand your unique circumstances and provide tailored advice to ensure your wishes are carried out exactly as you intend. Contact us to book your free intital consultation, and begin the process now!
The information provided in the document is a general summary and is not intended to be nor should it be relied upon as a substitute for legal or other professional advice. You should make an appointment with Jacaranda Law to recieve appropriate tailored advice for your specific situation.
