Estate planning is not the type of topic that you can pencil out a strategy during a coffee break. It’s a challenging topic that can quickly prove overwhelming.

People often overlook or misinterpret their estate tax position. The best way to avoid making estate planning mistakes is to become familiar with some of the more common pitfalls.

Mistake 1: Failure to have a will. Wills let you decide who will inherit your assets and name guardians for your minor children. If you do not make a will your state has standard laws called “interstate laws,” which will govern who will inherit assets. Such laws usually leave set percentages of your estate to spouse and children, and may not match your desires.

Mistake 2: Failure to keep your will up to date. Many state laws provide that a will is invalid if made before a major life event such as marriage, divorce, a move to another state, the birth or adoption of a child. Wills can easily be change, which means they are simple to update.

Mistake 3: Failure to keep track of beneficiaries of IRAs, qualified plans and insurance policies. These assets are unique in that by filling out a form you determine who will receive the benefits. Do you know who your beneficiaries are for these assets? If you don’t, you may have left valuable assets to someone that you no longer wish to receive them.

Mistake 4: Failure to plan for the liquidity of your estate. Most people don’t realize that the costs to settle their estate may require liquidity — the ability to quickly turn assets into cash. It’s more than paying for a funeral. Without sufficient cash to pay taxes or other expenses, your family may have to liquidate assets — such as a family business or other property — at an inopportune time. Avoid putting your family in the position of having a ‘fire sale’ on precious possessions by providing for sufficient liquidity.

Mistake 5: Owning everything jointly with your spouse. It’s common for married couples to own their assets “jointly with rights of survivorship.” However, if your joint net worth is $1 million or more, joint ownership could be an expensive mistake. Visit with advisers and consider owning some assets separately as part of your estate plan.

Mistake 6: Naming the wrong executor and/or trustee. An executor is called upon to collect assets, pay obligations and distribute your assets. A trustee must enforce all provisions of any trusts that you created. Did you choose a person who has the knowledge, integrity and stamina to fulfill these obligations in the face of family members’ pressure?

Mistake 7: Naming the same guardian for your minor children as for the property you’ve left to support them. If you have any doubts that the person you’ve chosen as guardian has the financial acumen and integrity to manage the property you’ve left your children, name a separate guardian to manage your childrens’ property.

Mistake 8: Leaving everything to your spouse. If your net worth is high enough, this could be a costly mistake. For most people who may be subject to estate taxes, a relatively simple estate plan can save hundreds of thousands of dollars in estate taxes.

Mistake 9: Leaving the wrong assets to the wrong people. If you have a “special-needs” child you should not leave him or her money to handle. By the same token, don’t leave too much cash to a teenager, or distribute a sizeable sum to a person with a history of substance abuse or who is otherwise unwilling or unable to manage it. You should explore options available to find the best fit.

Mistake 10: Failure to plan. You can control the future if you make decisions now. How you structure your estate will affect your family. If you’re a business owner, don’t forget to plan for succession and/or a buy out of your business.

Above all, remember that nothing is irreversible. Review your estate plan with your personal tax advisor to determine if its appropriate for your situation and that it complies with local law. Remember also that until you’ve taken action, you don’t have an estate plan. 

This column is produced by Financial Planning Associates, and is provided by R.Hutton Cobb, a Wachovia Securities financial advisor in Greenville, N.C.