Tom thought he had everything figured out. He’d downloaded a will template online, filled it out, and tucked it away in his desk drawer. “At least I have something,” he told his wife. Three years later, when Tom passed away unexpectedly, his family discovered that his DIY will was invalid under North Carolina law—missing crucial witness signatures that rendered the entire document worthless.
Estate planning mistakes can cost your family thousands of dollars, months of legal complications, and unnecessary emotional stress during an already difficult time. Here are the five most common errors we see in North Carolina and South Carolina, and how you can avoid them.
Mistake #1: Using Outdated or Invalid DIY Documents
The internet is full of “simple” will templates and estate planning forms, but what works in one state may be completely invalid in another. Even worse, laws change regularly, and that template you downloaded five years ago might not comply with current requirements.
The Real Cost
When DIY documents fail, your estate goes through intestacy—meaning state law, not your wishes, determines who inherits your assets. In North Carolina, this could mean your spouse receives only a portion of your estate instead of everything, with the remainder going to children who might not be financially ready for such responsibility.
How to Avoid It
Work with an attorney who understands current North Carolina and South Carolina law. While this requires an upfront investment, it’s far less expensive than the legal complications your family will face with invalid documents.
If you must use forms temporarily, ensure they comply with your state’s specific requirements:
– North Carolina: Two witnesses who sign in your presence
– South Carolina: Two witnesses, no recognition of handwritten wills unless formally executed
Mistake #2: Failing to Update Documents After Major Life Changes
Lisa created a comprehensive estate plan when she got married in 2018. When she divorced in 2022 and remarried in 2024, she never updated her documents. Her current husband was shocked to learn that her ex-husband was still named as executor and primary beneficiary of her life insurance.
The Legal Reality
While both North Carolina and South Carolina automatically revoke provisions for former spouses in wills upon divorce (thanks to recent 2024 updates in NC law), this doesn’t apply to all documents. Life insurance beneficiaries, retirement account designations, and powers of attorney don’t automatically update.
When to Update Your Estate Plan
Review and update your documents after:
– Marriage or divorce
– Birth or adoption of children
– Death of beneficiaries or executors
– Significant changes in financial circumstances
– Moving to a different state
– Changes in tax laws
Quick Action Steps
Set a calendar reminder to review your estate plan annually. Keep a list of all accounts with beneficiary designations and update them promptly after life changes.
Mistake #3: Ignoring Tax Implications and Planning Opportunities
Many people assume estate taxes only affect the ultra-wealthy, but poor planning can create unnecessary tax burdens even for modest estates.
Federal Tax Considerations for 2025
The current federal estate tax exemption is $13.99 million per individual, but this is scheduled to drop to approximately $6 million in 2026 when the Tax Cuts and Jobs Act provisions expire. If you have assets approaching these levels, waiting could cost your family significantly.
State Tax Realities
Neither North Carolina nor South Carolina currently imposes state estate taxes, which is good news for residents. However, if you own property in other states, you might face additional tax obligations.
Income Tax Traps
Many people overlook income tax implications of their estate plans. For example:
– Retirement account distributions to beneficiaries create taxable income
– Inherited property receives a “stepped-up basis,” potentially saving capital gains taxes
– Trust distributions may have different tax consequences than outright inheritances
Planning Strategies
Consider strategies like:
– Annual gifting to reduce estate size (2025 limit: $19,000 per recipient)
– Charitable giving for tax deductions and estate reduction
– Trust structures for tax-efficient wealth transfer
– Roth IRA conversions to reduce future tax burdens
Mistake #4: Poor Executor and Trustee Selection
Choosing the wrong person to handle your estate can turn a straightforward process into a family nightmare. Many people automatically choose their oldest child or spouse without considering whether they’re truly the best choice.
What Makes a Good Executor
Look for someone who is:
– Financially responsible and organized
– Geographically accessible to handle local matters
– Emotionally stable enough to handle family dynamics
– Available to dedicate time to estate administration
– Trustworthy and able to remain impartial
The Geographic Challenge
If you live in North Carolina but your chosen executor lives in California, they’ll face additional bonding requirements and may need local representation, increasing costs and complexity.
Professional vs. Family Executors
Sometimes a professional executor (bank or trust company) makes more sense than a family member, especially for:
– Large or complex estates
– Families with significant conflict potential
– Situations where no family member is suitable
– Estates with ongoing business interests
Backup Plans Matter
Always name alternate executors. Life changes, and your first choice might not be available when needed. Consider naming both a family member and a professional as co-executors for complex situations.
Mistake #5: Inadequate Incapacity Planning
Most people focus on what happens after death but ignore planning for potential incapacity during life. This oversight can force families into expensive and time-consuming guardianship proceedings.
The Guardianship Alternative
Without proper planning, if you become unable to manage your affairs due to illness or injury, your family must petition the court for guardianship or conservatorship. This process:
– Costs thousands of dollars in legal fees
– Requires ongoing court supervision
– Takes weeks or months to complete
– May result in someone you wouldn’t choose making decisions
Essential Incapacity Documents
Protect your family with:
Financial Power of Attorney: Allows someone to handle your financial affairs immediately upon incapacity. In North Carolina and South Carolina, these can be effective immediately or “springing” (effective only upon incapacity).
Healthcare Power of Attorney: Designates someone to make medical decisions when you can’t. This is separate from financial powers and equally important.
Advanced Healthcare Directive: Provides specific guidance about your medical care preferences, including end-of-life decisions.
HIPAA Authorization: Allows designated people to access your medical information, which is crucial for making informed healthcare decisions.
Trust-Based Incapacity Planning
If you have a revocable trust, your successor trustee can immediately step in to manage trust assets without court involvement. This provides seamless financial management during incapacity.
Creating Your Action Plan
Don’t let these common mistakes derail your family’s financial security. Take these steps now:
1. Audit your current documents for compliance with current state law
2. Review beneficiary designations on all accounts and insurance policies
3. Consider tax implications of your current plan
4. Evaluate your executor choices based on current circumstances
5. Ensure comprehensive incapacity planning is in place
The Cost of Inaction
While proper estate planning requires an investment of time and money, the cost of mistakes is far higher. Families dealing with invalid documents, contested estates, or guardianship proceedings often spend tens of thousands of dollars and endure months of legal complications.
Remember, estate planning isn’t just about documents—it’s about protecting the people you love most. By avoiding these common mistakes, you can ensure your family receives your legacy as you intended, without unnecessary legal hurdles or financial burdens.
For personalized guidance on avoiding these pitfalls in your North Carolina or South Carolina estate plan, consult with an experienced estate planning attorney who can review your specific situation and recommend appropriate strategies.
Your family’s peace of mind is worth the investment in proper planning.