In our busy practice, we tend to see certain recurring errors. In particular, we see planning errors that arise during the estate administration process after someone dies. Below are a few of these common errors, and, in the spirit of, “An ounce of prevention is worth a pound of cure,” we also discuss steps that you can take to prevent them.
- Joint ownership and disclaimers. Spouses frequently title property they own (or savings, checking and investment accounts) as “joint tenants with right of survivorship.” Legally, this means that, upon the death of the first joint tenant, the asset passes by operation of law to the surviving joint tenant.
This type of ownership can be desirable, but it also means that property bypasses the Will, which can lead to adverse tax results. If a couple owns assets in excess of the federal exemption amount (currently $12.06 million but scheduled to be cut in half as of January 1, 2026), having all assets pass into the surviving spouse’s name can lead to an unnecessary estate tax at the surviving spouse’s death. This issue also arises in states that have a state level estate tax, such as New York.
The classic solution to this issue is to have the assets of the first spouse to die pass to a trust (often known as an “exemption trust” or “credit shelter trust”) so as to use the first spouse’s estate tax exemption. If assets are held jointly, however, the surviving spouse frequently has to “disclaim” the deceased spouse’s half of the assets so that they pass to this trust.
A disclaimer must be completed and filed within nine months of the deceased spouse’s date of death. It is easy to miss this deadline, or misunderstand what is at stake – ie, generally a 40% tax on one’s assets. The current law also allows for a surviving spouse to elect to take the deceased spouse’s estate tax exemption, which complicates the decision-making around this issue. The prudent planning step here is to be aware of the relevant deadlines and speak with a tax advisor to make the optimal decision.
- POD or TOD accounts. There is an appeal to “payable on death” or “transfer on death” account designations, and many financial advisors recommend them to clients. Accounts with this designation typically bypass the probate process and transfer on death to the named beneficiary.
However, such account designations are often undesirable. If a Will creates a trust or trusts for children, for example, the POD account will never go to the trust, frustrating the decedent’s intent. The POD beneficiary can have a creditor who will then be able to assert a claim against the account or asset. Also, the estate can owe taxes or have other expenses, and the POD accounts may not be available to be used for these obligations.
We frequently find that POD account designations have unintended consequences. The prudent step here is to be wary of POD designated accounts, carefully think through their effects in the overall estate, change them where necessary, and do not take title to the decedent’s assets until final decisions have been made.
- Not updating fiduciaries. Relationships change. People age. People move. These are just some of the reasons that the fiduciaries you chose a few years ago may no longer be appropriate in your estate planning documents. Examples: Mom names the oldest child as a fiduciary but late in her life, it turns out a caregiver child is the better choice. Husband names wife’s brother as a fiduciary, but then husband and wife get divorced and wife’s brother is no longer a good choice.
The prudent step here is that you should review your estate planning documents every few years and fiduciary choices should be kept current.
- Lack of immediate liquidity. Getting a Will admitted to probate and the executor appointed can take time. Some state courts are notoriously slow. If all of the decedent’s assets are frozen because the executor has not been appointed, there can be a cash or liquidity crunch in the estate. There are usually immediate bills to pay, including funeral expenses, medical bills, maintenance for a home, and more.
It is important to have some liquidity. Accordingly, the prudent step here is to think through the practicalities of what will occur if you pass away and whether your spouse, child or others have immediate access to funds. This can be accomplished, for example, by having a co-trustee on a revocable trust account, or having a small joint account that a family member or loved one can access.
- Digital records and passwords. At this point, we all have seen the stories of cryptocurrency owners who pass away without anyone knowing how to access their crypto account or digital wallet. Just like that, the value of the asset goes to zero. In addition, many people now choose paperless statements and only access their bank and investment accounts online. It is no longer effective that the family can scan the decedent’s mail for a few months and be confident that they have knowledge of all of the decedent’s assets.
The prudent step here is to keep an up-to-date list of accounts, including information such as the institution name, account number, title on the account, approximate balance and account passwords. In the age of two-factor authentication, it also may make sense to give a spouse or agent under a power of attorney his or her own access to the account. It also may make sense to maintain a list of other digital property, like e-mail accounts or photo storage (with passwords), which may have little monetary value but great sentimental value, so loved ones can access them.