The larger and more complex your estate, the more opportunities there are to make mistakes. That's why careful estate planning with the help of a qualified professional is critical—not only to help ensure that your assets go where you intend, but also to reduce the potential tax burden on your heirs.
With that in mind, understanding what people most often get wrong can help you get it right. Here, we bust five of the most common estate-planning myths our wealth strategists see when working with high-net-worth clients.
1. Myth: Once I create a trust, my assets are protected.
Truth: A trust is an empty shell—you must transfer assets into it for it to be effective.
This is a mistake that estate professionals see too often: Investors go through the trouble and cost of creating a trust but then fail to fund it. If you don't fund your trust correctly, you're potentially exposing your estate to creditors, taxes, and probate court—three things most estate owners work hard to avoid.
One reason this happens is that people don't realize a trust is just a vehicle. It is your responsibility as an estate owner to transfer assets into the trust. Your estate-planning attorney can provide detailed instructions about how to do this, but they are not authorized to do it on your behalf—and it may take multiple steps.
For example, if you plan for a piece of real estate to be held in a trust for your grandchildren, you must prepare a new deed that lists the trust as the property owner and then file that document with the relevant county. Likewise, if you intend to place any bank or investment accounts in the trust, they must be retitled with the exact name of the trust, and any insurance policies must be updated to name the trust as the owner and beneficiary.
2. Myth: Once I craft an estate plan, I'm done.
Truth: Life is unpredictable, and you need to update your estate plan accordingly.
Estate planning is not a "one and done" task. Rather, your estate plan should evolve as your heirs, priorities, and needs change.
For example, perhaps someone named in your will has died, or you want to set aside some of your assets for a new grandchild. Or maybe you divorce but have several assets listing your ex-spouse as a beneficiary. If you don't adjust your plans to account for such events, it may eventually cause headaches—and potential friction—for your loved ones in the future.
Even if you haven't experienced any major life changes, reviewing your plan at least every three years can help ensure it continues to reflect your wishes and current situation.
3. Myth: My spouse automatically inherits my unused lifetime estate tax exemption.
Truth: Spouses must claim any unused portion of your exemption.
While it's true your spouse can employ any of your unused federal gift and estate tax exemption—a.k.a., the "deceased spouse unused exemption"—they must claim it on an estate tax return (IRS Form 706) within five years of your death.
This will be especially important as we approach a major change in the lifetime gift and estate tax exemption. As of May 2025, it's $13.99 million per individual and $27.98 million per married couple, but without any congressional action to extend it, the exemption is set to be cut to about $7 million for individuals on January 1, 2026. Estates over those amounts may be subject to federal estate taxes, which is currently 40%, plus any applicable state estate taxes. (Twelve states plus the District of Columbia levy such taxes.)
4. Myth: Estate planning is only about death and taxes.
Truth: Your estate plan should include stipulations for your incapacity.
While much of estate planning revolves around what happens to your wealth when you die, it can also help you decide—while you are healthy and able—who will have the authority to make decisions on your behalf if you become incapacitated.
If you can't make financial decisions, for example, a durable power of attorney grants someone the ability to make them for you. If that person is your spouse, you may still want the legal designation in place so they can access your financial accounts without any delay. You can also make similar legal designations for medical decisions. Even if it's your spouse, it may still make sense to draft a legal document to that effect.
And if you have minor children, it's essential to name in your will a guardian to care for them in the event of your death.
5. Myth: My will dictates who gets what assets.
Truth: A will alone may not transfer assets to your desired recipients—or help your heirs avoid probate.
Your will is an important component of your estate plan, but it has limits. For one, it must be legally validated through probate, which can be an expensive and lengthy process for sizable estates. It is also superseded by beneficiary designations.
If the beneficiary named on a retirement account or insurance policy differs from the heir named in a will, the beneficiary designation carries the day. If the joint title for a piece of real estate includes someone other than the person named in a will, or if someone is named on a transfer-at-death deed (which is available in some states), the person on the deed likely will get the property.
Updating beneficiary and titling information is one of the most basic aspects of effective estate plan management, and it can be even more important if you have changed your will. It's not unheard of to have a situation in which someone has been written out of a will but gets a life insurance payout or inherits a retirement account—or even a house—because beneficiary designations and titling documents were not updated.
Don't go it alone
Working with a qualified financial or wealth consultant can help ensure that you shape and manage your legacy the way you intend, in line with your goals and circumstances. Such professionals can also help you avoid potentially costly mistakes and share some of the burden of this important process.
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The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.
Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.
The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information.
The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.