Four common estate-planning errors can cause you and/or your heirs considerable stress and aggravation, family arguments, and unnecessary taxes and legal expenses. Below is a description of each error and strategies recommended by experts to handle each situation.

1. Not Planning For the Disposition of Untitled Personal Property- Untitled personal property is all the items people own where the owner is not identified with a written document. Examples include tools, furniture, photos, books, dishes, jewelry, collections (e.g., coins), artwork, and more. Talking about untitled property is "sensitive" because of the emotions involved, the sentimental meanings attached to various pieces of property, and differing perceptions of what is "fair" in the distribution process. Also, unlike a bank account or stock, there is often only one of an untitled property item so it is impossible to divide everything equally. Experts recommend that property donors determine their goals first. For example, is it important to give more to less affluent children or according to a child's age, gender, marital status, or birth order? Belongings can also be used as "props" for telling family stories and explaining to others the value placed upon certain items. There are several ways that untitled personal property can be distributed including memorandums attached to a will, lists given to a person's executor or family members, gifts made during a donor's lifetime, drawing names out of a hat, verbal promises, and labeling items. For additional information on transferring untitled personal property, visit the "Who Gets Grandma's Yellow Pie Plate" Web site developed by the University of Minnesota Cooperative Extension at www.yellowpieplate.umn.edu.


2. Not Writing a Will- Many Americans die intestate (without a will) and, by doing so, default to the "one size fits all" will provided by their state of residence. This state-determined property distribution formula may or may not be appropriate for their family's situation but there is no choice in the matter. Estate-planning costs are also increased because a court-appointed administrator must be appointed, and generally bonded, which increases an estate's administrative expenses. Some people procrastinate on drafting a will because they do not know who to name to key positions, such as executor and guardian, so they do nothing. There may also be a mistaken impression that only family members can be named, which is untrue. It is not unusual for people to name a professional fiduciary, such as a bank trust department, to serve as executor or to name a close friend, rather than a family member, as guardian. Another reason to have a will is to make gifts to charitable organizations upon your death. The state formula does not allow for this. According to the book You're 50-Now What? By Charles Schwab, less than 6% of Americans leave money to charitable organizations upon their death, probably because so many die intestate.


3. Conflicts in the Titling of Assets- This error is seen especially in remarried households. People want a asset to go to one person (e.g., a child from their first marriage) and put this in their will, yet they own the asset with rights of survivorship with someone else (e.g., a second spouse). In cases where provisions in a deceased person's will conflict with the titling of assets, the title almost always determines the asset's subsequent owner. Persons with complex estates and/or family relationships are advised to seek legal counsel to avoid making this error.


4. Incorrect Beneficiary Designations- According to an article in the January 2004 issue of Investment Advisor magazine, an estimated 75 to 80 percent of financial account forms have incorrect or outdated beneficiary designations. Errors in beneficiary designations can lead to the disinheritance of heirs, delays in providing for the financial needs of loved ones, and unnecessary expenses and tax payments. The article notes that three common errors made when naming a beneficiary are: failing to regularly update beneficiary designations, naming an estate as beneficiary, and failing to name a contingent beneficiary. It is wise to periodically review the beneficiary designations on IRAs, tax-deferred employer plans like 401(k)s, and life insurance policies to make sure they are current, especially if you've experienced a major life event such as the death of a spouse, divorce, marriage, remarriage, or the birth of a child.