Estate planning is one of the most important steps we can take to protect our families, preserve our assets, and ensure our wishes are carried out. Yet, many people delay the process or make simple mistakes that can create unnecessary stress and complications for their loved ones. Whether you're just starting your estate plan or reviewing existing documents, understanding these common pitfalls can help you make more informed decisions.

At its core, effective estate planning is about clarity, preparation, and communication. By taking a proactive approach, we can help ensure that your plan works exactly as intended—both during your lifetime and beyond.

 

Failing to Create an Estate Plan at All

One of the most common—and most costly—mistakes is simply not having an estate plan in place. Many people assume estate planning is only necessary for the wealthy or those nearing retirement, but the reality is that every adult can benefit from having at least a basic plan.

Without an estate plan, your assets will be distributed according to state laws, not your personal wishes. This can lead to outcomes that may not reflect your intentions, especially if you have a blended family, unmarried partner, or specific individuals you want to provide for.

• No control over asset distribution: The court decides who inherits your property.
• No designated decision-makers: Without powers of attorney, loved ones may need court approval to manage your affairs if you become incapacitated.
• Increased stress for your family: Loved ones may face delays, confusion, and added legal costs.

Even a simple estate plan—including a will, healthcare directives, and powers of attorney—can provide essential protection and peace of mind.

 

Not Updating Documents After Major Life Changes

Creating an estate plan is an important first step, but it shouldn’t be a one-time task. Life changes—and your estate plan should evolve along with it. Failing to update your documents after significant events can lead to outdated instructions that no longer reflect your current wishes or circumstances.

Some key life events that should trigger a review include:

• Marriage, divorce, or remarriage
• The birth or adoption of a child or grandchild
• The death or incapacity of a named beneficiary, executor, or agent
• Significant financial changes, such as buying property or receiving an inheritance

Outdated estate planning documents can result in unintended consequences, such as leaving assets to a former spouse or failing to include new family members. Regular reviews—typically every three to five years—help ensure your plan continues to reflect your goals and protect your loved ones.

 

Overlooking Beneficiary Designations and Asset Titling

Many people are surprised to learn that certain assets are not controlled by a will or trust. Accounts such as life insurance policies, retirement plans, and payable-on-death bank accounts pass directly to the named beneficiary—regardless of what your estate planning documents say.

This is where mistakes often happen. If beneficiary designations are outdated or inconsistent with your overall plan, your assets may go to unintended recipients. For example, a former spouse or an outdated beneficiary could still receive funds if those designations haven’t been updated.

We recommend regularly reviewing:

• Retirement accounts like IRAs and 401(k)s
• Life insurance policies
• Bank and investment accounts with designated beneficiaries
• Property ownership and titling

Ensuring these elements are aligned with your estate plan is essential for avoiding delays, confusion, and unintended outcomes.

Choosing the Wrong People for Key Roles

An estate plan relies heavily on the individuals you appoint to carry out your wishes. These roles—such as executor, trustee, and power of attorney—require responsibility, organization, and sound judgment.

Choosing someone based solely on family dynamics or convenience can create challenges down the road. The wrong choice may lead to delays, mismanagement, or even conflict among family members.

When selecting individuals for key roles, consider:

• Their ability to handle financial and legal responsibilities
• Their willingness to serve in the role
• Their ability to remain impartial and communicate effectively
• Their proximity and availability if needed

In some cases, it may make sense to appoint a neutral third party or professional to ensure the process is handled efficiently and fairly.

Not Communicating Your Plan With Loved Ones

Even the most well-crafted estate plan can fall short if no one knows it exists or understands your intentions. Lack of communication is one of the leading causes of confusion and disputes during estate administration.

While you don’t need to share every detail, having open conversations with key individuals can make a meaningful difference. This includes letting your loved ones know:

• Where your important documents are stored
• Who you’ve chosen for key roles
• Any specific wishes or intentions that may not be obvious

Clear communication helps set expectations, reduces the likelihood of misunderstandings, and provides reassurance during an already difficult time.

Build a Plan That Works When It Matters Most

Avoiding common estate planning mistakes starts with taking a proactive and thoughtful approach. By creating a plan, keeping it up to date, aligning your accounts, choosing the right people, and communicating clearly, you can help ensure your wishes are honored and your loved ones are protected.

Estate planning doesn’t have to be overwhelming—but it does need to be done correctly. If you’re unsure whether your current plan is complete or up to date, we’re here to help guide you through the process with clarity and care. Contact Us to schedule a consultation and take the next step toward protecting your future and your family.

In meetings with thousands of clients, we hear people quoting advice that they grew up with decades ago, believing it is still valid in today’s world. Just because these sayings are common, doesn’t mean the advice is reliable. 

1. If It’s Not Broke, Don’t Fix It. 

As people transition into retirement and the later stages of life, they tend to be comfortable in their surroundings and at times don’t realize that things are in need of attention and investment. Instead of waiting until the everyday things you rely on to become outdated, deteriorate and ultimately stop functioning, proactively anticipating problems and dealing with them head-on is often the preferred approach.

For your primary home, are there any aspects that haven’t been updated for 20-30 years? Maybe the roof needs fixing before snow and ice cause damage next winter. Are there trees at risk of falling on the house or into the pool that you aren’t going to be using much anymore? If your heating system is 40 years old, maybe it’s time to upgrade to a more efficient HVAC system and benefit from the latest technology such as smart thermostats and mini splits.

Outside the home, be mindful of how you get around. Buying or leasing a new car can allow you to take advantage of modern safety features such as sensors, backup cameras and GPS navigation. All these elements will help to supplement faculties that start declining in our later years, such as peripheral vision and response time. Furthermore, having a vehicle that is covered under warranty can help avoid surprise repair bills. 

Since your retirement years will be different than the previous 20 years of life, both in terms of your lifestyle and finances, look at your home and cars and get projects checked off the list proactively, knowing that the costs will be significantly higher than they were 10-20 years ago. A project that may have cost $5,000 in the past could be a $15,000 job today - if you can even find a contractor! Getting projects tackled proactively is a worthwhile investment, and your future self will thank you for it.

2.Ignorance is Bliss.

This saying means that what you don’t know won’t hurt you, but in our experience that is rarely true. What you don’t know probably will hurt you. In our experience, a lot of people are overly dependent on “experts”. If someone is trying to sell you something that sounds too good to be true, it probably is. Be aware that some products are attached to very high commissions and fees that can be hidden, so you need to be aware of any underlying motivations for the advice upfront, instead of after the fact.

If financial concepts such as budgeting, cash flow projections, the sequence of returns and market volatility are new to you, it can be a steep learning curve to develop these skills later in life, but they are important for self-reliance. Taxes will likewise have a significant effect on your income and investments in retirement. Having a liquid source of funds will be essential, so you’re not forced to sell equity investments in an economic downturn.

In addition, the force of inflation is also quite real. We hear people complaining all the time that things have become more expensive, but on average, inflation runs about 2-3% per year, and you need to be planning for that. Something as simple as a 3% inflation rate cuts your spending power in half in about 20 years, so if you think you will be spending the same amount in 20 years as you do today, think again.

Investing in a broad-based portfolio that reflects the performance of the overall stock market, coupled with some conservative elements that can be relied upon during a downturn, means your portfolio can keep pace with the force of inflation over time.

3. Don’t Put All Your Eggs In One Basket.

In an attempt to follow this old adage and benefit from diversification, we often see clients open up multiple accounts with multiple institutions, but they are not quite sure how these accounts fit into an overall plan. Rather than being truly diversified, at times we find their investments are quite heavily concentrated in certain asset classes
and that clients may not understand what risks they are running.

Thus we recommend: 

• One checking account;

• One pre-tax retirement account (or add a Roth IRA if you can); and

• One post-tax investment account.

That’s it. Pool your savings with your after-tax investments. If you want to buy CDs at multiple banks, you can buy them through a broker, without opening 10 accounts at 10 banks across town. Having multiple accounts can also create a tax compliance nightmare for your beneficiaries as they try to gather 1099s from multiple accounts.

By simply multiplying accounts, you don’t make your life better or less risky. In fact, you make it more complicated and possibly more costly to administer your estate after you pass, or for someone else to pick up if something happens to you, so try to keep it simple and to understand what diversification really is.

No one has a crystal ball to predict where the stock market is going or what the best stock is going to be in the next year or 10 years from now, but we do know that the US stock market tends to return about 10% a year, and in an inflationary environment, that means you can spend about 5-6% a year without dipping in to your principal.

4. A Penny Saved Is A Penny Earned.

While no one can deny the benefits of frugality, sometimes you need to spend money to make money.

We often see clients chase coupons and believe saving is done through spending on sale items. They see a discount offer and feel proud of themselves for buying something to “get the deal”, but many times the purchase is something that they don’t need at all.

Other times, clients buy something in bulk, but the volume becomes a burden because they aren’t consuming at the rate they used to. This is especially true when people buy too much perishable food, which ends up spoiling in the fridge. Don’t chase these low dollar savings. 

Instead, think about quality over quantity and buying things that will last. Rather than buying something online that takes up space, such as another kitchen gadget that will only be used once or twice, or another duck decoy that just gathers dust, have a sense of mindfulness and intentionality about the cost, purpose and value of the item. Each time you purchase something, you also need to have a budget to maintain it, and a place to store it. These hidden costs are not advertised in sale fliers. Instead, consider purchasing an experience that creates lasting memories. You can keep the digital pictures as a visual reminder of a wonderful occasion or vacation with family and friends.

5. I Paid Cash For That.

Sometimes paying cash is great if you can afford to do so, but often times, it makes sense to take advantage of a low interest rate if your investments offer a higher rate of return.

Many people realize a higher rate of return on their investment portfolio than they would save by buying a car for cash. Some people avoid leasing a car, but that can be a wonderful option for an older person who doesn’t put a lot of miles on their car and doesn’t want to have the hassle of owning a car that suddenly goes out of warranty and needs a costly repair.

Instead of owning a vacation home, it may be cheaper to sell the property and use the earnings on the proceeds for short-term rental stays. This choice gives you flexibility and you don’t have to worry about the constant costs for maintenance, repairs, insurance and property taxes.

In summary, it is important to have a simple and rational approach to life in retirement. By following these five tips, you can spend more time enjoying your golden years and less time chasing paper and maintaining  an overly complex lifestyle that does not align with your long-term goals.

If you are struggling in one of more of these areas, one of our attorneys will be happy to bring you up to speed with our time-tested, streamlined approach. Here’s to a great New Year!

 

 

 

 

 

In our work with families, we often see a common theme: a vacation home that gradually becomes something more complex. What was once a simple retreat evolves into a shared responsibility—one that carries financial, legal, and emotional weight across generations.

That shift doesn’t happen all at once, and it’s rarely planned for as early as it should be. Families hold onto the idea that goodwill and shared history will be enough to carry things forward. Sometimes it is—but more often, without structure, even the most meaningful places can become sources of tension rather than connection.

To help guide these conversations, we’ve created our newest workbook: Strategic Stewardship of the Family Vacation Home.

This resource is designed to walk families through the realities of multi-generational ownership—from understanding the true cost of keeping a second home, to exploring legal structures like trusts and LLCs, to establishing clear governance around usage, expenses, and decision-making. It also addresses the less obvious, but equally important considerations: how to plan for conflict before it arises, how to create fair exit strategies, and how to preserve not just the property, but the relationships tied to it.

You can access the full workbook on our website or download it directly using the link below. Whether you are just beginning to think about the future of a family property or are already navigating shared ownership, this guide is meant to serve as a practical starting point for more informed, productive conversations.

In the end, successful stewardship isn’t about holding onto a home at all costs; but rather about making intentional, informed decisions that align with your family’s values—so that the place you’ve built together continues to bring people closer, not pull them apart.

DOWNLOAD WORKBOOK

In meetings with thousands of clients, we hear people quoting advice that they grew up with decades ago, believing it is still valid in today’s world. Just because these sayings are common, doesn’t mean the advice is reliable. 

1. If It’s Not Broke, Don’t Fix It. 

As people transition into retirement and the later stages of life, they tend to be comfortable in their surroundings and at times don’t realize that things are in need of attention and investment. Instead of waiting until the everyday things you rely on to become outdated, deteriorate and ultimately stop functioning, proactively anticipating problems and dealing with them head-on is often the preferred approach.

For your primary home, are there any aspects that haven’t been updated for 20-30 years? Maybe the roof needs fixing before snow and ice cause damage next winter. Are there trees at risk of falling on the house or into the pool that you aren’t going to be using much anymore? If your heating system is 40 years old, maybe it’s time to upgrade to a more efficient HVAC system and benefit from the latest technology such as smart thermostats and mini splits.

Outside the home, be mindful of how you get around. Buying or leasing a new car can allow you to take advantage of modern safety features such as sensors, backup cameras and GPS navigation. All these elements will help to supplement faculties that start declining in our later years, such as peripheral vision and response time. Furthermore, having a vehicle that is covered under warranty can help avoid surprise repair bills. 

Since your retirement years will be different than the previous 20 years of life, both in terms of your lifestyle and finances, look at your home and cars and get projects checked off the list proactively, knowing that the costs will be significantly higher than they were 10-20 years ago. A project that may have cost $5,000 in the past could be a $15,000 job today - if you can even find a contractor! Getting projects tackled proactively is a worthwhile investment, and your future self will thank you for it.

2.Ignorance is Bliss.

This saying means that what you don’t know won’t hurt you, but in our experience that is rarely true. What you don’t know probably will hurt you. In our experience, a lot of people are overly dependent on “experts”. If someone is trying to sell you something that sounds too good to be true, it probably is. Be aware that some products are attached to very high commissions and fees that can be hidden, so you need to be aware of any underlying motivations for the advice upfront, instead of after the fact.

If financial concepts such as budgeting, cash flow projections, the sequence of returns and market volatility are new to you, it can be a steep learning curve to develop these skills later in life, but they are important for self-reliance. Taxes will likewise have a significant effect on your income and investments in retirement. Having a liquid source of funds will be essential, so you’re not forced to sell equity investments in an economic downturn.

In addition, the force of inflation is also quite real. We hear people complaining all the time that things have become more expensive, but on average, inflation runs about 2-3% per year, and you need to be planning for that. Something as simple as a 3% inflation rate cuts your spending power in half in about 20 years, so if you think you will be spending the same amount in 20 years as you do today, think again.

Investing in a broad-based portfolio that reflects the performance of the overall stock market, coupled with some conservative elements that can be relied upon during a downturn, means your portfolio can keep pace with the force of inflation over time.

3. Don’t Put All Your Eggs In One Basket.

In an attempt to follow this old adage and benefit from diversification, we often see clients open up multiple accounts with multiple institutions, but they are not quite sure how these accounts fit into an overall plan. Rather than being truly diversified, at times we find their investments are quite heavily concentrated in certain asset classes
and that clients may not understand what risks they are running.

Thus we recommend: 

• One checking account;

• One pre-tax retirement account (or add a Roth IRA if you can); and

• One post-tax investment account.

That’s it. Pool your savings with your after-tax investments. If you want to buy CDs at multiple banks, you can buy them through a broker, without opening 10 accounts at 10 banks across town. Having multiple accounts can also create a tax compliance nightmare for your beneficiaries as they try to gather 1099s from multiple accounts.

By simply multiplying accounts, you don’t make your life better or less risky. In fact, you make it more complicated and possibly more costly to administer your estate after you pass, or for someone else to pick up if something happens to you, so try to keep it simple and to understand what diversification really is.

No one has a crystal ball to predict where the stock market is going or what the best stock is going to be in the next year or 10 years from now, but we do know that the US stock market tends to return about 10% a year, and in an inflationary environment, that means you can spend about 5-6% a year without dipping in to your principal.

4. A Penny Saved Is A Penny Earned.

While no one can deny the benefits of frugality, sometimes you need to spend money to make money.

We often see clients chase coupons and believe saving is done through spending on sale items. They see a discount offer and feel proud of themselves for buying something to “get the deal”, but many times the purchase is something that they don’t need at all.

Other times, clients buy something in bulk, but the volume becomes a burden because they aren’t consuming at the rate they used to. This is especially true when people buy too much perishable food, which ends up spoiling in the fridge. Don’t chase these low dollar savings. 

Instead, think about quality over quantity and buying things that will last. Rather than buying something online that takes up space, such as another kitchen gadget that will only be used once or twice, or another duck decoy that just gathers dust, have a sense of mindfulness and intentionality about the cost, purpose and value of the item. Each time you purchase something, you also need to have a budget to maintain it, and a place to store it. These hidden costs are not advertised in sale fliers. Instead, consider purchasing an experience that creates lasting memories. You can keep the digital pictures as a visual reminder of a wonderful occasion or vacation with family and friends.

5. I Paid Cash For That.

Sometimes paying cash is great if you can afford to do so, but often times, it makes sense to take advantage of a low interest rate if your investments offer a higher rate of return.

Many people realize a higher rate of return on their investment portfolio than they would save by buying a car for cash. Some people avoid leasing a car, but that can be a wonderful option for an older person who doesn’t put a lot of miles on their car and doesn’t want to have the hassle of owning a car that suddenly goes out of warranty and needs a costly repair.

Instead of owning a vacation home, it may be cheaper to sell the property and use the earnings on the proceeds for short-term rental stays. This choice gives you flexibility and you don’t have to worry about the constant costs for maintenance, repairs, insurance and property taxes.

In summary, it is important to have a simple and rational approach to life in retirement. By following these five tips, you can spend more time enjoying your golden years and less time chasing paper and maintaining  an overly complex lifestyle that does not align with your long-term goals.

If you are struggling in one of more of these areas, one of our attorneys will be happy to bring you up to speed with our time-tested, streamlined approach. Here’s to a great New Year!

 

 

 

 

 

When we think about estate planning, we often focus on who will inherit what and how to ensure our loved ones are cared for. But another important part of the process is understanding how taxes may affect your estate and your beneficiaries. Without proper planning, a significant portion of your estate could go to taxes rather than to the people and causes you care about most. That’s why incorporating tax efficiency into your estate plan is essential — not just for high-net-worth individuals, but for anyone with real estate, retirement savings, or family heirlooms they want to pass on.

Let’s explore the key tax considerations that can influence your estate plan and how we can take proactive steps to reduce the burden.

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Overview of Federal Estate and Gift Tax Thresholds

The federal government imposes an estate tax on the value of assets transferred upon death, but only if your estate exceeds a certain threshold. As of 2025, the federal estate tax exemption is approximately $13 million per individual (subject to legislative changes). That means most estates won’t owe federal estate tax — but those that do can face rates as high as 40% on the portion that exceeds the exemption.

In addition to the estate tax, the federal government also has a gift tax, which applies to transfers made during your lifetime. However, there are key exclusions that can be used strategically:

• Annual gift tax exclusion: You can give up to $18,000 per recipient per year (2025 amount) without triggering gift tax.

• Lifetime gift tax exemption: Gifts exceeding the annual exclusion count against your lifetime limit, which is unified with the estate tax exemption.

Understanding how these exemptions work — and how lifetime gifts affect your estate — is a crucial part of long-term planning.

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State-Level Estate Taxes and How They Might Affect Your Plan

While many estates fall below the federal threshold, some states impose their own estate or inheritance taxes — and these can kick in at much lower levels.

If you live in a state like New York, Massachusetts, or Connecticut, your estate could be taxed even if it’s far below the federal exemption. These state estate tax exemptions often range from $1 million to $5 million, and the rates vary by state.

Here’s how this might impact your plan:

• Residency matters: Estate tax is generally determined by where you legally reside, but owning property in multiple states may subject your estate to additional scrutiny or tax filings.
  
  
• Relocation planning: For some, moving to a state without an estate tax later in life can significantly reduce the overall tax burden — but it’s important to establish clear residency for it to count.
  
  
• Proactive strategies: Techniques like gifting during your lifetime or using specific types of trusts can help minimize the state estate tax impact.

If you’re unsure whether your state imposes these taxes, or how your current estate would be affected, this is an area where legal guidance can really make a difference.

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How Trusts Can Help Manage or Reduce Tax Burdens

Trusts are powerful estate planning tools that can help reduce estate taxes, avoid probate, and control how assets are distributed after your death. When structured strategically, certain types of trusts offer meaningful tax advantages:

• Credit Shelter Trusts (also known as Bypass Trusts) allow couples to maximize their combined estate tax exemptions.

• Irrevocable Life Insurance Trusts (ILITs) remove life insurance proceeds from your taxable estate, while still providing for beneficiaries.

• Grantor Retained Annuity Trusts (GRATs) can be used to transfer appreciating assets while minimizing gift taxes.

• Charitable Remainder Trusts (CRTs) allow you to generate income during your lifetime and donate the remainder to charity, often resulting in both income and estate tax benefits.

The right trust structure depends on your specific goals, assets, and family dynamics. By incorporating trusts into your estate plan, we can ensure more of your legacy stays intact for your loved ones.

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Using Charitable Contributions for Tax-Efficient Planning

Philanthropy isn’t just a way to give back — it can also be a strategic component of your estate plan. Charitable giving can reduce the taxable value of your estate while supporting causes that matter to you.

Here are a few common approaches:

• Charitable Bequests: Leave a gift to a nonprofit in your will, reducing the size of your taxable estate.

• Donor-Advised Funds (DAFs): Make a charitable donation now, receive an immediate tax deduction, and distribute the funds to charities over time.
  

• Charitable Trusts: As mentioned above, CRTs and Charitable Lead Trusts (CLTs) can provide both income and estate tax benefits while supporting charitable organizations.

By aligning your estate planning with your charitable values, you can leave a meaningful legacy and reduce your family’s future tax burden.

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Strategies for Minimizing Taxes on Inherited Assets

It’s not just your estate that may be taxed — your beneficiaries could also face tax implications based on the type of assets they inherit. That’s why we focus not only on transferring wealth, but doing so in the most efficient way possible.

Some strategies include:

• Taking advantage of step-up in basis: Most inherited assets like stocks or real estate receive a step-up in cost basis, which can eliminate capital gains taxes if sold soon after inheritance.
  

• Using Roth IRAs for tax-free growth: Unlike traditional IRAs, Roth IRAs allow for tax-free withdrawals by heirs, which can be a significant advantage.

• Structuring inheritances thoughtfully: For example, it may be better to leave tax-deferred accounts to beneficiaries in lower income brackets to reduce income taxes on required distributions.

Reviewing your assets and how they’re titled — and understanding the tax consequences of each — helps ensure your beneficiaries aren’t left with an unexpected bill.

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Proactive Planning Protects Your Legacy

Understanding how taxes affect your estate plan is essential to making smart, informed decisions that protect your assets and your family’s future. The good news is that with proactive strategies and personalized guidance, it’s possible to significantly reduce or even eliminate certain tax burdens.

At Donohue, O’Connell & Riley, we help clients build tax-efficient estate plans that align with their financial goals and personal values. Whether you're just starting to plan or updating an existing estate plan, we're here to guide you through the process with clarity and care.

Contact Us to schedule a consultation and take the next step in protecting your legacy.