Estate Planning: Don’t Set It and Forget It (Part 1)

Do you have a “dusty will”?  As a financial advisor, our work with clients encompasses the full vision of their financial lives.  In a comprehensive plan it is impossible to carve out one aspect of their plans without impacting other planning details.  Our planning is created around the process we call “SCOPE”…where the “C” stands for “collaboration”.  Collectively, we work with other specialists in law, banking, etc. to create a cohesive team.  Our work is to quarterback that team to make sure we are all on the same page.

When it comes to estate planning, we generally work with a client’s estate attorney to facilitate the process and ensure that all “life events” such as marriage, divorce, birth of a child or grandchild, move to another state, death of a beneficiary or receipt of an inheritance are considered.

This article illustrates what can happen if oversight is neglected. I spoke with my associate, Paul Brown, who is an estate planning attorney and president of Chandler & Brown, Ltd. in Minneapolis.  Because of his years in the business and his in-depth understanding of what works and what doesn’t in estate planning, Paul was able to share numerous real-life examples. In fact, we’ll follow up next month with additional insights on how to avoid these common mistakes in estate planning.


Failure to Review beneficiary designations and asset titling:

Some years ago, my client, Tom, decided to go for a motorcycle ride with friends while on temporary assignment in CA. This ride turned tragic when a young adult, still intoxicated from the night before, drove into the group and killed three riders, including my client.  His wife called about three weeks after the funeral when she discovered that Tom’s $1 million life insurance policy was still payable to his father.  The couple had been married 6-7 years but Tom had never updated the beneficiary on his policy.  My firm was hired to negotiate with Tom’s father who did not get along with his daughter-in-law.  After many sleepless nights, the father did the right thing and agreed to give the wife $900K while keeping $100K for himself.

History shows that when you set up an estate plan, changes in your life will affect the people you love. Whether it’s a divorce and remarriage, young kids, elderly parents, in-laws or step children, there are many considerations to ensuring that the beneficiaries are set up properly.  Otherwise, you could accidentally disinherit someone.

A similar case involved a second marriage, where the husband died and the second wife found out that his retirement account of $600K was still payable to the first wife. The first wife was legally entitled to the money and there was nothing the second wife could do about it.

 The moral of this story is that it’s critical to make sure your beneficiaries are set up properly. And don’t forget to review life insurance beneficiaries after a death of a parent or spouse.

I’ve had clients where an elderly parent dies and then the second parent dies shortly after. The first spouse was the beneficiary on the life insurance with no back up beneficiary.  So it’s up to the insurance company to make the arbitrary decision based on the policy.  And all policies are different. Many times, we have to go to court, causing needless expense, before the insurance company will pay anyone.


Leaving Assets Outright to Your Children:

Leaving your assets outright to children, especially young children, can have disastrous results. If the spouse doesn’t survive, the child is awarded the insurance money. Utilizing trusts can provide some asset protection and the assets are still available for their health, education, maintenance and support.

In planning, even if the children are older, we suggest keeping it in trust for the child.  They can be their own trustee and control it but the assets are protected.

Let’s say the child is 40 years old. A normal estate plan would just distribute the assets to them because they are old enough to handle it. But we keep the trust going for the child because it offers protection.  That way, if that child goes through a divorce, they are not at risk of losing half of it.

Many grandparents want to keep their assets in the family. So, another benefit to having a trust is that the assets will pass automatically to grandchildren instead of a son-in-law or daughter-in-law.


Not Treating Timeshares as an Interest in Real Estate:

Timeshares are very popular in vacation destinations, allowing part ownership of a property that is used a few weeks a year. However, if you are the sole owner and you die, the timeshare is subject to a potential probate in the state it resides.

For example, if I own a time share in Hawaii and I die, my family is going to have to go through Hawaiian probate court to transfer this timeshare. The probate will typically cost more than the timeshare is worth so the family ends up losing it.

This could have been avoided by placing your timeshare in a revocable trust.  So… if you’re a Minnesota resident with a cabin in Wisconsin, you should definitely have a trust.


Failure to Update Power of Attorney or Your Healthcare Documents:

Power of attorney is assigned by the principal (you) giving that person (agent) legal authority to make business decisions should you become incapacitated, mentally or physically.

I had a call from a family in Wisconsin.  The couple was in their 80’s and the wife had had a stroke and was in the hospital. When it was time to move her to a nursing home, the hospital would not let the husband pick the nursing home because he did not have a healthcare document or power of attorney.  Because hospitals are buying nursing homes, they want their patients to go there. Without a power of attorney, hospitals can make this very personal decision for your loved ones.

Also, after 7-10 years, some large banks will consider power of attorney documents outdated and no longer valid.  If you’re incapacitated, you can’t sign a new one so it would require the court to appoint a guardian.  A word of caution – update your financial power of attorney.


Failing to Have a Succession Plan:

There are many tax and non-tax factors to consider when owning a family business. Failing to address certain aspects such as whether to sell the business during our lifetime and how estate taxes will be paid are critical factors in the successful transition of the business to and family harmony.

Failing to determine who will run your business when you are unable is a big mistake. When the business owner dies, the surviving spouse may not want to be a business owner and may want to cash out. Small business owners need to have a buy-sell agreement in place that’s funded with life insurance. 

In summary, it is critical to not only have a plan in place but to think of an estate plan as more of a process than a singular event.  A “set it and forget it estate plan” can be costly.  Life happens and desires and goals change over time, as can laws.

Make a plan and review the plan to ensure that it is up to date.   Give us a call if you have concerns or questions.   Your financial well-being is of utmost importance.


Olson Wealth Group is a full service wealth management firm. With wise counsel and clear strategies, our experienced specialists provide tailored approaches that strive to maximize wealth. For more information, please visit

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. Registered states include: AR, AZ, CA, CO, FL,GA, IA, IL, IN, MA, MD, ME, MI, MN, MO, MT, NC, ND, NV, NY, OH, OR, PA, SC, SD, TX, VA, WA, WI, WY. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

Some excerpts were taken from Wealth Advisor “Seven Mistakes in Estate Planning” June 26, 2018

The owner of this website has made a commitment to accessibility and inclusion, please report any problems that you encounter using the contact form on this website. This site uses the WP ADA Compliance Check plugin to enhance accessibility.