How to Make Sure Your Estate Plan Doesn’t Fail

At Libertas Wealth Management Group, we believe financial planning is not just about growing wealth. It is also about protecting the people, assets, and intentions behind that wealth.

Adam Koós recently sat down with Professor Kelly Lise Murray, a lawyer, mediator, legal scholar, and host of the Wealth Litigated Podcast. After nearly two decades teaching law at Vanderbilt University, Kelly shifted her focus toward real-world wealth disputes involving trusts, estates, family conflict, and asset protection.

Her work focuses on what happens when planning fails.

As Kelly puts it, these cases have “all the drama of true crime without the blood.” The hope, of course, is that families never end up in these situations. But real litigated cases can offer powerful lessons for anyone who wants to reduce the chance of future conflict, confusion, or court involvement. The transcript repeatedly emphasizes one central theme: lack of coordination between legal documents, financial accounts, family changes, and state law can lead directly to litigation.

Why Estate Plans Fail

Many families assume that having documents is enough.

A will, trust, beneficiary form, healthcare directive, or prenuptial agreement can create a sense of security. But according to Kelly, the real issue is whether those documents work together and reflect the client’s current intentions.

Estate plans can fail when:

• Documents are outdated
• Beneficiary designations conflict with the will or trust
• A person remarries but does not update the plan
• Divorce documents and estate documents are not coordinated
• Trusts are funded incorrectly
• Insurance policies do not reflect title changes
• Tax elections are missed
• State law changes the outcome

That is why estate planning should not be treated as a one-time event. It is part of a larger wealth life cycle that should be revisited after major life events.

For families who want a broader foundation, Libertas has written more about the importance of estate planning and why these conversations should happen before a crisis.

Blended Families Need Extra Clarity

One of the first areas Kelly discussed was blended families.

Second marriages, children from prior marriages, stepchildren, and former spouses can all create complexity. The biggest mistake she sees is failing to update estate planning documents before and after a second marriage.

If nothing changes, a new spouse may have statutory rights that override the will. In many states, a surviving spouse may be entitled to an elective share of the estate, even if the will says something different.

That can create unintended consequences, especially when children from a prior relationship are involved.

Kelly also emphasized the importance of reviewing beneficiary designations. If a former spouse is still listed as a beneficiary on certain assets, that former spouse may inherit. In some cases, even former in-laws may inherit, depending on the document and state law.

The lesson is simple: intent is not enough.

Your documents must match your intent.

Real Cases Show Why State Law Matters

Kelly walked through several litigated cases that showed how different facts and different states can produce very different outcomes.

In one Ohio case, a father updated his will shortly before marriage but did not update it again after having children. When he died, his widow argued that the children had been accidentally excluded and should inherit as pretermitted heirs. The case involved millions of dollars and ultimately required litigation to determine whether the children had already been provided for through lifetime transfers.

In a California case, a stepchild was allowed to inherit after the court concluded he qualified as a natural child under California law. The court looked at the relationship, including evidence that the stepfather referred to the stepson as his son.

These cases point to a critical reality: estate planning is state-specific.

Families should not assume that documents created in one state will work the same way after a move. This is especially important for retirees who relocate from one state to another.

If you have moved, remarried, divorced, bought property, sold a business, or experienced a major family change, it may be time to review your estate plan with qualified counsel.

Trusts Can Create Problems When They Are Not Structured Carefully

Trusts can be powerful planning tools, but they can also create conflict when roles, rights, and responsibilities are not clearly defined.

Kelly discussed a Franklin County, Ohio, case involving a trust created by a husband and his second wife. The husband died while the couple was going through a divorce. His second wife became a trustee and had a life interest in the trust, while his adult daughters from a prior marriage were remainder beneficiaries.

The daughters wanted information about the trust. The surviving spouse argued they did not have standing and were not entitled to an accounting.

The court ultimately held that the daughters did have standing and could force an accounting, but they had to litigate to get there.

The planning lesson is clear: trust documents should define accountability upfront.

That may include:

• Whether beneficiaries receive accountings
• Whether there is a co-trustee
• Whether a professional trustee should be involved
• Whether a trust protector is appropriate
• What guardrails apply to distributions
• What happens if the surviving spouse and children disagree

This is not about assuming the worst of anyone. It is about reducing pressure on the family and creating a structure that can help prevent conflict.

Trustee Misconduct Is a Real Risk

Another case involved a trustee using trust funds for personal expenses, including a divorce attorney, a car, and donations. The trust had been created by a mother to benefit a disabled son, and the sister serving as trustee misused the funds.

Eventually, a successor trustee stepped in, and the original trustee was removed. But again, the problem was caught only after litigation.

For families, this highlights the importance of choosing fiduciaries carefully.

The person who manages a trust should be responsible, organized, ethical, and capable of following fiduciary duties. In some situations, a family member may not be the best choice. A co-trustee, professional fiduciary, or corporate trustee may offer more accountability and reduce family tension.

For broader planning conversations around family governance and wealth transfer, Libertas has also covered the value of multi-generational family meetings.

Titling Property Into a Trust Requires Pre-Planning

One of the most practical parts of the conversation focused on real estate and trusts.

Adam shared a personal example involving parents setting up a trust and the complications that can arise when a home has a mortgage or a home equity line of credit.

Kelly explained that the Garn-St. Germain Act protects certain transfers from triggering a mortgage acceleration clause, but not all trust transfers are protected. If property is transferred into the wrong type of trust, the mortgage or HELOC could potentially become due.

That can create a major liquidity problem.

She also flagged another issue many people overlook: property and casualty insurance.

Homeowners’ insurance does not simply insure the house. It insures the named insured’s insurable interest in the house. If the title is transferred from an individual to a trust, but the insurance policy is not updated properly, the trust may not be the named insured. If the house burns down, the insurance company may deny the claim.

That is why funding a trust should be coordinated carefully with:

• The estate planning attorney
• The mortgage lender
• The insurance company
• The financial advisor
• The tax professional, when appropriate

The structure matters, but so does the sequence.

Small Execution Errors Can Be Expensive

Not every estate planning failure comes from a poorly designed plan. Sometimes the plan is sound, but execution fails.

Kelly discussed a federal tax case involving a missed QTIP election. A QTIP trust is generally designed to provide income for a surviving spouse while preserving principal for other beneficiaries. But for the tax treatment to work, the estate tax return must be filed correctly and on time.

In the case discussed, the QTIP election box was not checked, and assets were listed incorrectly. That mistake reportedly cost the family more than $800,000.

The takeaway: details matter.

Estate planning often requires coordination among attorneys, accountants, trustees, executors, and financial professionals. For major filings, there should be checklists, review steps, and more than one set of eyes before documents are submitted.

Prenuptial Agreements Must Be Done Correctly

Prenuptial agreements can be useful planning tools, especially for business owners, second marriages, and blended families. But they must be executed properly.

Kelly discussed an Ohio case where a prenuptial agreement was thrown out because of how it was handled. The husband, who was a lawyer, drafted the agreement himself and had his future wife sign it the day before the wedding. She did not have a meaningful opportunity to obtain independent counsel.

The court found the agreement overreaching, and the agreement failed.

Kelly’s lesson was practical: even when independent counsel is not strictly required, it is usually a very good idea.

For business owners, current valuations can also matter. If someone is entering a second marriage with a business, relying on an outdated valuation may create problems later.

A well-prepared prenuptial agreement can reduce conflict. A poorly prepared one can become the cause of the conflict.

Incapacity Planning Is Just as Important as Death Planning

Estate planning is not only about what happens after death.

It is also about what happens if someone becomes incapacitated.

Adam shared a real example of someone who had divorced and remarried, but the ex-spouse was still named in the healthcare directive. If that person became non-responsive in the hospital, the ex-spouse could be the first person called to make medical decisions.

That is not a theoretical issue. It happens.

Families should review:

• Healthcare powers of attorney
• Financial powers of attorney
• Living wills
• HIPAA authorizations
• Emergency contacts
• Beneficiary designations
• Trustee and executor appointments

These documents should be reviewed after divorce, remarriage, relocation, illness, the death of a named fiduciary, or a major family conflict.

For those thinking through later-life planning more broadly, Libertas has also written about comprehensive estate planning and long-term care insights.

The Role of Financial Advisors

Kelly encouraged financial advisors to help clients inventory what she calls “life cycle legal documents.”

That does not mean financial advisors should provide legal advice. It means they can help clients identify gaps and coordinate with the appropriate professionals.

A useful review might include questions such as:

• Do you have a current will or trust?
• When was it last reviewed?
• Have you moved states since it was drafted?
• Are your beneficiary designations current?
• Who is listed as the healthcare agent?
• Who is listed as the financial power of attorney?
• Who are your trustees and successor trustees?
• Have you updated documents after a divorce or remarriage?
• Do your trust, insurance, tax, and account titling strategies align?

This kind of coordination is a major part of Libertas’ approach to comprehensive planning.

Key Takeaways for Families

This conversation reinforces several core principles:

• Estate planning is not a one-time event
• State law matters
• Intentions must be reflected in legally valid documents
• Divorce, remarriage, and relocation should trigger a review
• Beneficiary forms can override other planning documents
• Trusts need clear accountability structures
• Property transfers should be coordinated with lenders and insurers
• Tax elections and filing details matter
• Incapacity documents should be reviewed, not ignored
• Families should work with qualified legal professionals

The most important step is not perfection. It is starting the review before a crisis forces the issue.

Want to Learn More?

You can listen to the full conversation on The Retirement Fiduciary Podcast or explore additional educational articles from Libertas Wealth Management Group.

If you are wondering whether your estate plan, beneficiary designations, tax strategy, and financial plan are working together, our team offers no-pressure second opinions and comprehensive planning designed around your goals.

Visit libertaswealth.com to start the conversation, or contact us directly