14 mistakes not to make with your will

Improperly disinheriting a child. In only one state -- Louisiana -- does a child have a right to inherit by law. In the other states, though, a child has a good chance of getting a share of the inheritance if she isn't mentioned in the will at all, Clifford said. If you really want to disinherit a child, mention her by name in the document. Try to resist the urge to add snotty comments, however, since that will create even more bad feelings and raise the possibility of a will-challenging lawsuit. Another approach: Leave the child something of value, with a "no-contest" clause that revokes the bequest if she challenges the will.

Covering all the bases

Not contemplating worst-case scenarios. It's awful to consider, but what if the people you want to receive your estate -- your spouse, your child -- die when, or shortly after, you do? If you haven't named alternate beneficiaries, your assets will be distributed according to state law -- which often means your estate winds up with people you didn't anticipate, like your in-laws or your child's other parent, even if you've long since been divorced.

Tying up too much money in trusts. The bypass trusts mentioned above can be a valuable tool for reducing your eventual estate-tax bill. But they also put your heirs in contention with each other; your kids can't inherit the trust money until your spouse dies. That can create enormous family tensions, particularly if your spouse is not your children's parent but a step-parent. Worse yet is if your spouse is as young as, or younger than, your kids so that they might never inherit. If your surviving spouse can get by without it, consider bequeathing at least some of your estate directly to your kids or other heirs rather than making them wait.

Being too specific. If you've ever watched a family fight over who gets the blender or the cuckoo clock, you may be tempted to use your will to list every item you own and who gets it. That level of detail can create unnecessary hassle and cost -- do you really want to redraft your will every time you break one of your Precious Moments figurines? You're usually better off bequeathing more valuable collections or groups of items in your will -- "I leave my jewelry to my son, Edwin, and my woodworking tools to my daughter, Edwina" -- while leaving the less valuable stuff to your heirs in a side letter. Other options: Give it away while you're alive or ask your executor to have your family draw straws or pick items they want in a "round robin" fashion.

Ruling from the grave?

Trying to be the puppet master. In some affluent circles, "family incentive trusts" are all the rage. They're designed to motivate children to achieve, says Georgia attorney and trust enthusiast John J. Scroggin, instead of spoiling them with an early inheritance. The kids might get a dollop of their trust fund if they graduate from college with a certain grade point average, for example, or receive matching funds based on their annual earnings from a job.

Unfortunately, some parents go overboard, trying to control children already in their 30s, 40s or 50s. Others fail to make the trust language flexible enough to accommodate emergencies or changes in circumstances. Do you really want a child shut out of an inheritance if, for example, she suffers a brain injury and can't attend college or hold a job?

The whole idea of ruling from beyond the grave is a little creepy anyway, so try to curb your enthusiasm for "dead hand" tactics, particularly if your kids are already grown.

Not coordinating with other documents. Some of your assets, particularly life insurance proceeds and retirement accounts, will go to the beneficiaries you named either when you established the accounts or when you last updated their paperwork. Property held in joint tenancy will automatically go to the other person. If you try to give those assets to someone else in your will, you could be setting off a legal battle. You should also check with your bank and brokerage to see if any beneficiaries are named for your accounts, since those may be passed directly to heirs as well.

Not telling your heirs where to find it. You may not want your family to know in advance what's in your will, but they should at least know how to find it. Don't just entrust the information to your executor, since she might not be available when the time comes. (Also, don't leave the original in a safe deposit box, which might be sealed and therefore inaccessible upon your death.)

A California woman who had lost her father e-mailed me some time ago in a panic because she knew her late father had estate planning documents, but she couldn't find them. She worried that her father's estate would wind up going through probate, which in California is an expensive and time-consuming court process that her father had sought to avoid by having the documents drafted.

Fortunately, she was able to track down a copy that had been filed with an accountant at one of the banks her father used. Your heirs might not be so lucky, though, and you don't want to spend money on an estate plan that no one will see or use.

Liz Pulliam Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "Your Credit Score: Your Money & What's at Stake." Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board and helps middle-class families cope at Building a Brighter Future.

Updated Sept. 8, 2009

< previous |  1 | 2 |