We have all heard some version of the saying, “Ignorance of the law is no excuse.” While most people associate that principle with criminal law, it can have important consequences in financial and estate planning as well. Estate planning mistakes caused by misunderstanding the law, relying on outdated information, or simply assuming everything is covered can potentially affect the people and assets you worked hard to protect.
Estate planning laws can be complicated, and they change over time. That is one reason having documents in place is only part of the equation. Your estate plan should reflect current law, your current financial circumstances, and what you actually want to accomplish.
A Costly Lesson From an Estate Tax Case
An older federal tax case involving a Minnesota couple, Peter and Margaret Koester, provides an interesting example.
At the time, the couple’s combined estate was approximately $1.2 million. Mrs. Koester died first and left her property to her husband. When Mr. Koester later died, his estate faced federal estate tax because of the estate tax exemption amounts and rules in effect at the time.
The resulting tax liability exceeded $109,000.
The estate later argued that the couple did not understand the complicated tax consequences of their estate plan. The U.S. Tax Court was sympathetic to their circumstances but did not agree that their lack of knowledge provided a basis for changing the tax result after their deaths.
In other words, once the opportunity to plan had passed, the court was not going to rewrite the couple’s estate plan to produce a better outcome.
Estate Tax Laws Have Changed
It is important to put the Koester case in historical context.
Federal estate tax laws are significantly different today. Among those changes is portability, which may allow a surviving spouse to use a deceased spouse’s unused federal estate and gift tax exemption when the appropriate federal estate tax return is timely filed and the required election is made.
The federal estate and gift tax exemption is also much higher today than it was when the Koesters died.
That does not make the lesson from the case irrelevant. In fact, it highlights an important point: estate planning laws change, and a plan created years ago may not take advantage of today’s rules or address today’s circumstances.
Having a Will Is Not the Same as Having a Complete Plan
The Koesters had wills prepared by an attorney. Yet their case still resulted in an expensive dispute over the tax consequences of their plan.
A will can be an important part of an estate plan, but estate planning can involve much more. Depending on your circumstances, your plan may need to address trusts, beneficiary designations, powers of attorney, health care documents, tax considerations, retirement accounts, business interests, real estate, long-term care concerns, and how assets are titled.
The right combination depends on your family, your assets, and your goals.
This is also why simply signing estate planning documents and putting them away indefinitely can create problems. Changes in your family, finances, property, or the law may mean your plan no longer works the way you intended.
Don’t Let an Avoidable Mistake Shape Your Legacy
Some estate planning mistakes are not discovered until after someone dies or becomes incapacitated. At that point, the options for correcting the problem may be limited—and sometimes there is no opportunity to correct it at all.
Regularly reviewing your estate plan gives you the opportunity to identify potential problems while you can still do something about them. A review can also help determine whether changes in the law or your personal circumstances should lead to changes in your documents or overall planning strategy.
Make Sure Your Plan Still Works for You
Estate planning mistakes can be avoided. Estate planning should not be based on assumptions, outdated rules, or documents that have not been reviewed in years. The decisions you make today can affect your family long after you are no longer able to make changes.
At Tesfaye O’Neill Law and Financial, we help individuals and families look at the bigger picture—your assets, your family, your goals, and the legal and financial considerations that may affect your plan.
- Pet Trusts Because Your Pets Deserve a Plan Too - September 30, 2026
- Estate Planning Mistakes: Why Not Knowing the Law Can Be Costly - September 16, 2026
- What to Do After Inheriting Money: A Smart Guide to Protecting Your Inheritance - September 9, 2026