Estate Planning / The Compound Effect
Outdated Wills, Missing Beneficiaries, and No Plan: The Estate Planning Mistakes We're Seeing Every Week
| 6 min | By Heath J. Harris
Eight families came to us in a single month with urgent estate planning needs. Here are the most common mistakes and how to avoid them.
In just the past month, we have had eight families come to us with urgent estate planning needs. The details varied, but the underlying theme was the same: critical documents were either missing, outdated, or dangerously incomplete.
- A son discovered his parents' only will was drafted over 40 years ago and no longer reflected their wishes or their assets
- A daughter struggled to make medical decisions for her mother with dementia -- no health care directive was in place
- A young family scrambled to set up a will and guardianship designations for their children after a health scare
- A recent divorcee needed to update every document to ensure assets would pass to her children, not her ex-spouse
Different stories, same problem: outdated or missing estate plans. When that happens, families end up in court, assets get tied up in probate, and wealth is lost to taxes, legal fees, or the wrong hands. At Compound Advisory, we see this pattern repeatedly -- from clients here in Maryland to families we serve virtually across the country. It is far more common than most people realize.
The Core Documents Every Adult Needs
Estate planning is not just for the wealthy or the elderly. At a minimum, every adult should have these foundational documents in place:
Last Will and Testament
A will directs how your assets are distributed after death and names guardians for minor children. Without one, your state's intestacy laws decide who gets what -- and that outcome may not align with your wishes at all.
Durable Power of Attorney
This document appoints someone you trust to manage your financial and legal affairs if you become incapacitated. Without it, your family may need to petition a court for authority to pay your bills, manage your investments, or handle your tax planning obligations.
Health Care Proxy and Advance Directive
These documents ensure your medical wishes are respected and prevent family conflict during emotionally charged moments. They designate who can make healthcare decisions on your behalf and outline your preferences for treatment.
Beneficiary and Contingent Beneficiary Designations
This is the one that catches most people off guard: the beneficiary designations on your retirement accounts, life insurance policies, and bank accounts override your will. If your ex-spouse is still listed as the beneficiary on your 401(k), they will receive those assets regardless of what your will says. These must be reviewed and updated regularly.
Trusts: When You Need More Than a Will
For many of our clients -- particularly those with significant assets, real estate, or blended families -- a trust provides important advantages beyond what a basic will can offer:
- Revocable Living Trust -- Flexible and can be changed anytime during your lifetime. It avoids probate, keeps asset transfers private, and provides for seamless management of your affairs if you become incapacitated. For families with property in multiple states, including Maryland, a trust can avoid the need for probate proceedings in each state.
- Irrevocable Trust -- More restrictive to change, but offers meaningful tax advantages and creditor protection. Often used for large estates, business transfers, or advanced tax planning strategies such as generation-skipping transfers or charitable remainder trusts.
Why Updating Matters as Much as Creating
Having documents is step one. Keeping them current is step two. We recommend reviewing your estate plan whenever life changes, including:
- Marriage, divorce, or remarriage
- Birth of children or grandchildren
- Significant changes in net worth or asset composition
- Business growth, ownership changes, or exit planning
- Moving to a different state (estate laws vary significantly -- what works in Maryland may not work in Florida or California)
- Health issues or major life transitions
- Changes in tax law such as the SECURE Act or estate tax threshold adjustments
An outdated will or a retirement account with an ex-spouse listed as beneficiary is a ticking time bomb. We have seen families lose hundreds of thousands of dollars to avoidable mistakes.
Business Owners: Special Considerations
If you own a business, estate planning must extend well beyond personal assets. Critical elements include:
- Succession planning -- Who runs the business if something happens to you tomorrow?
- Buy-sell agreements -- Funded by insurance or reserves so co-owners and family members are not left fighting over control or valuation
- Trust-based ownership structures -- Holding company shares in trust to avoid probate and minimize estate taxes
- Liquidity planning -- Ensuring enough cash is available to cover taxes and expenses without forcing a fire sale of business assets
Without these protections, your life's work could be dismantled in months.
How We Approach Estate Planning at Compound Advisory
As a fee-only fiduciary financial advisor, we do not draft legal documents ourselves. Instead, we coordinate closely with qualified estate attorneys to ensure your documents align with your overall financial plan. Our role includes:
- Reviewing wills, powers of attorney, health directives, and beneficiary designations on a regular schedule
- Coordinating with estate attorneys so legal documents, investment accounts, and tax strategies work together as a unified plan
- Ensuring account titles, trust funding, and beneficiary designations are consistent and current
- For qualifying clients, facilitating fundamental estate planning through our partnership with Trust and Will
Whether you are working with us from Annapolis or connecting virtually from anywhere in the country, we make sure nothing falls through the cracks.
Do Not Leave It to Chance
Estate planning is not just paperwork. It is about peace of mind for you and clarity for your family. Waiting until a crisis happens is the worst time to address your plan -- by then, your options are limited and the emotional stakes are at their highest.
If it has been more than three years since you reviewed your estate plan -- or if you are not sure what documents you have in place -- we encourage you to schedule a complimentary Retirement Clarity Assessment. We will help you identify gaps, coordinate with the right professionals, and build a plan that protects what you have spent a lifetime building.
Compound Advisory is a registered investment advisor. Estate planning services are coordinated through qualified estate attorneys. All investing involves risk, including the possible loss of principal.