Seven Major Planning Mistakes

There are many succession and estate planning mistakes, but these are the ones we’ve seen cause the most trouble, most often:

1. Inadequate succession planning: If your heirs are unprepared, you may be the reason. If you don’t have a clear, written succession plan or haven’t shared it with your successors and heirs, it may be time to start.

2. Tax motivated estate planning: Tax planning is a key part, but only part, of your overall planning. Taxes cause far fewer business problems than family feuds.

3. Failure to address family issues: Sibling rivalry, parental favoritism, divorce, remarriage, and differing levels of business skill and success can be time-bombs set to blow up your legacy—unless you detonate them.

4. Wrong choice of executor: Documents will guide your trustee or executor, but that person must deal with your heirs. Be sure he or she has the objectivity, maturity, compassion, wisdom, and resolve to handle them and the responsibility.

5. Putting a sibling in charge of another sibling’s finances: Even a wise sibling will lack the objectivity of someone outside the family—and be subject to family dynamics—when tasked with overseeing siblings. It’s usually (not always) better to have a non-sibling executor armed with clear documents in this role.

6. The wrong business structure: Business entities such as family limited partnerships and limited liability companies can be quite useful. But they must be structured carefully, used correctly, and located in the right jurisdiction.

7. Lack of candor about your plans: If you don’t want to tell your heirs about your plans, ask yourself why. Your answer may be revealing. If you tell heirs what you’re planning and why, they can prepare themselves accordingly. Often heirs’ input surprises testators, who alter their plans for the better.