Estate Planning Priorities: Avoid Costly Trust & Probate Mistakes
The most commonly overlooked priority is ensuring your assets are titled correctly and estate planning documents are executed to distribute assets according to your wishes. This requires a fundamental understanding of how asset titling works. In my experience, estate planning is certainly a new (and strange) language for most clients. Unfortunately, it is not always logical or intuitive. Families need to sufficiently understand these rules when their entire net worth is at stake.
Why asset titling matters more than your will or trust
The probate process is an important topic to understand as it applies to your situation. It’s unique in every state, so local expert legal advice is essential. Similarly, court costs, legal fees, taxes, and other expenses and claims must be understood accurately, but don’t let these concerns drive all decisions. A classic mistake is preparing a well-drafted Revocable Living Trust (or Last Will and Testament, if preferred), Pour Over Will, and other documents. Then, to avoid probate, the client titles assets to distribute by beneficiary designation or Transfer on Death (TOD) instead of letting those assets flow through the Revocable Trust.
When beneficiary designations override your trust
In such cases, the client prioritizes avoiding probate. This allows assets to pass outside the carefully drafted terms of the Revocable Trust. The primary purpose of the Revocable Trust is to avoid probate. But using beneficiary designations produces the opposite result: assets bypass the trust’s terms entirely. You may have carefully thought through trust terms for children, grandchildren, a surviving spouse, or a disabled family member, including trustee and contingent beneficiary designations. All of that planning gets ignored when assets (primarily financial ones) pass entirely outside this process.
How a By-Pass Trust can fail if assets aren’t titled correctly
Another costly mistake is to have a Revocable Living Trust (or Last Will and Testament, if preferred) with a By-Pass Trust (or, more commonly, a Disclaimer By-Pass Trust) executed to minimize estate taxes, and then use beneficiary designations on financial assets to avoid probate. The result could be estate taxes of up to 40% federally, as well as potential state estate taxes. The use of a By-Pass Trust also requires the careful titling of all assets so the trust functions as intended.
Estate planning has two steps. First, meet with an experienced estate planning attorney and have carefully drafted documents completed and executed. Additionally, title your assets in accordance with the estate plan. Families often overlook this second step. The cost can be significant, and it’s worse still when trusts meant for a spouse, young family members, or family members with special needs never get funded.
Do you need to worry about estate taxes in 2026?
The federal exclusion: then and now
Before 2000, the U.S. Estate Tax exclusion was about $600,000 per person. As of 2026, that exclusion is $15 million per person. Under current law, it’s scheduled to increase annually with the cost of living. So the percentage of the population facing estate tax exposure today is radically different than it was before 2000.
How state estate taxes differ
State Estate Taxes vary by state, and some states have an exclusion far lower than the $15 million federal exclusion. The basic rules of estate taxes are that assets you own or sufficiently control are included in your taxable estate, less amounts passing to your spouse (or with a marital deduction or QTIP trust for your spouse) and less debts generally. If the net taxable estate is more than $15 million, then U.S. Estate taxes apply at a rate up to 40%. Different states have their own estate tax rules, which in some cases have a much lower exclusion. Some of these rules are entirely different for certain non-U.S. citizens, including permanent residents.
Planning for a threshold that could change
Of course, no one knows to what extent these estate tax laws may change in the future, particularly given growing concern about U.S. deficits and debt. So the real question isn’t whether you’d owe estate taxes when you die. It’s whether you face enough risk, given the possibility of future law changes, to warrant estate tax planning now.
Minimizing or eliminating probate
A common misconception is that probate has nothing to do with estate taxes. For example, if a Revocable Living Trust or other probate-avoiding titling also avoided estate taxes, presumably no one would ever pay estate taxes. Instead, if you have sufficient control over an asset, such as with the use of a Revocable Living Trust, then such assets are included in your taxable estate.
Estate Taxes are to be distinguished from Probate Court fees. As noted above, U.S. Estate Taxes can be 40% plus state estate taxes, while, in Connecticut, for example, Probate Court fees are approximately between .015% and .50% with a maximum limit on such fees. Many individuals have a net worth far below the U.S. Estate Tax Exclusion, but because these laws could change someday, it’s generally advisable to include planning such as Disclaimer By-Pass Trusts in their estate planning documents anyway.When a client prioritizes avoiding probate over minimizing estate tax, they may title assets to avoid probate instead of titling them consistent with their tax planning. The unintended cost of this mismatch can be extraordinary
Top Tip: Long-term care costs, including in-home care, can reduce the size of an estate before death, sometimes by hundreds of thousands of dollars. Some families purchase long-term care insurance not just to fund care itself, but to protect the estate they intend to leave behind. It’s worth discussing with your attorney or financial advisor whether LTC insurance makes sense as part of your broader estate plan.
Consider estate administration as well as probate.
Even with well-planned documents, correctly titled assets, and minimized probate and estate taxes, there’s still work to be done. This is commonly referred to as ‘Estate Administration.’ For example, assets typically need to be managed, liquidated/sold, accounted for and distributed. Further, estate and income tax returns need to be filed, debts paid, and other matters administered.
What estate administration actually involves
Similarly, assets held in a trust rather than distributed through a Last Will and Testament still need administration. Depending on the circumstances, this can be significant. This is likely true even though you have been successful in minimizing the probate process and estate taxes. For example, I use a rather lengthy checklist of items to consider when a family member dies. Many of these items may be inapplicable in most situations, but they should still be reviewed in any event.
Top Tip: If you’re coordinating in-home care for a spouse or aging parent, don’t assume a Power of Attorney automatically covers it. Many POAs are drafted broadly. They never specifically address who can hire caregivers, sign care agreements, or pay ongoing care costs from the person’s accounts. It’s worth confirming with your attorney that the POA explicitly authorizes this, ideally before care needs become urgent.
What documents do you need for estate planning?
Recommended estate planning documents may vary by state, so seek expert legal advice in your state. Generally, typical advisable documentation includes a Last Will and Testament, Power of Attorney and Living Will/Healthcare Representative Designation (these documents are necessary for each individual, so each spouse would need them).
Top Tip: These documents become especially important once in-home care begins. Having your POA and Healthcare Representative Designation executed before they’re needed, rather than scrambling once a crisis hits, can make the difference between a smooth transition and a stressful one.
Where a Revocable Living Trust fits in
Revocable Living Trusts are becoming increasingly popular, so if desired these trusts (often one Revocable Living Trust, rather than one for each spouse, is acceptable for individuals without meaningful risk of estate taxes) replace the typical Last Will and Testament but then would require a “Pour Over Will” as well to “catch” any assets that may have unintentionally not been transferred to the Revocable Trust. Often, you must retitle real estate to align with the estate plan, including transferring it into the Revocable Trust.
Again, each state is unique. If you move after completing your estate planning, consult an estate planning attorney in your new state. Be sure to consult an attorney whose area of expertise is estate planning.
Keeping your documents safe and accessible
These documents should be kept in a safe (but not hidden) location. Clients often leave the originals with their attorney for safekeeping and should keep a photocopy of the executed originals themselves. It is typically appropriate, if not advisable, to give photocopies of these documents to one or more family members or friends. Those individuals should also know where the originals are kept.
Thomas Drew is an attorney in Fairfield and Westport, CT, specializing in Estate Planning and Elder Law, including the strategic use of trusts. He works with families to prepare Wills, Trusts, Powers of Attorney, Living Wills, and proper asset titling, with a focus on preserving wealth, minimizing taxes and probate, and protecting assets for family members who need extra safeguards. He previously served three terms as a Connecticut State Representative and was recognized with the Bridgeport Regional Business Council’s Regional Impact Legislator Award for his contributions to state economic planning.
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