You have spent years building something meaningful. A home, a piece of land, savings you set aside one paycheck at a time.
The last thing you want is for your family to lose months sorting through court paperwork because the plan you thought you had turned out to have holes in it. According to Caring.com’s 2025 Wills and Estate Planning Study, 76% of Americans have no estate planning documents in place.
Estate planning mistakes do not just happen to people who forget to plan. They happen to people who planned but missed critical steps along the way.
This guide covers seven of the most common estate planning mistakes South Dakota families make. You will learn:
- Why creating a trust is only half the job, and what happens when you skip the other half
- How joint tenancy creates risks most families never see coming
- What South Dakota law says about your assets when no plan exists
- Why even modest estates need protection from probate
- How one outdated beneficiary designation can override your entire plan
Mistake 1: Creating a Trust but Never Funding It
What Trust Funding Actually Means
Setting up a trust is a meaningful first step. That said, a trust only controls the assets that have been transferred into it.
Trust funding is the process of retitling your property so the trust, not you personally, is the legal owner. For a bank account, that means changing the account registration to the name of your trust. For real estate, it means recording a new deed that transfers ownership from your name to the trust’s name.
Investment accounts, vehicles with titles, and life insurance policies all require their own transfer steps. Each institution has its own paperwork, and skipping even one account can leave that asset outside the trust entirely.
What Happens When a Trust Stays Empty
If your trust is unfunded at the time of your death, the assets you intended to protect may pass through South Dakota’s probate process instead. Under SDCL 29A-2-101, any portion of your estate not disposed of by will or trust is subject to intestate succession.
That process is public, can take months, and may produce results that do not match your intentions. Trust funding is where planning meets execution. Without it, the trust document is just paper.
Mistake 2: Relying on Joint Tenancy Instead of a Trust
Why South Dakota Families Default to Joint Ownership
Joint tenancy is one of the most common shortcuts families use to avoid probate. A parent adds a child to a bank account or a deed, assuming the asset will transfer automatically at death.
The South Dakota Consumer Protection office warns against the “indiscriminate use of joint tenancy ownership.” When you add a child as a joint owner on a bank account, you are making a legal gift of half the value of that account. If that child has creditors, faces a lawsuit, or goes through a divorce, your money is now exposed to claims that have nothing to do with you.
The Risks You Don’t See Until It’s Too Late
Joint tenancy also creates fairness problems in families with more than one child. If you add one child to a $150,000 account, that child receives the full balance at your death, and your other children receive nothing from that account.
A properly funded revocable trust avoids this entirely by keeping assets under your control during your lifetime and distributing them according to your instructions after your death. Trust funding ensures every dollar goes where you intended.
Mistake 3: Skipping the Plan Because Your Estate Feels “Too Small”
What a $200,000 Estate Looks Like in Probate
Many South Dakota families assume estate planning is only for the wealthy. The 2025 Caring.com survey found that 40% of adults without a will cited a lack of assets as their reason for not planning.
A family with a home worth $180,000, a truck, two bank accounts, and a small life insurance policy may have an estate worth $200,000 to $250,000. Without a trust in place, that entire estate is subject to probate.
Under SDCL 29A-2-102, if you are married with children from a prior relationship, your spouse receives the first $100,000 of your intestate property plus half of the remainder. Your children split what is left. If that is not what you intended, the court will not adjust for your wishes when no plan exists.
For families with farmland, mineral rights, or property in multiple counties, probate becomes even more complicated. Trust funding avoids this entirely by transferring ownership to the trust during your lifetime.
Mistake 4: Failing to Review and Update Your Plan Over Time
Life Events That Should Trigger a Review
Estate planning mistakes do not only happen during the creation phase. Some of the most expensive ones happen years later, when a plan that once made sense no longer reflects your life.
Divorce, remarriage, the birth of a grandchild, a move across state lines, or the death of a named trustee can all create gaps. South Dakota follows the Uniform Probate Code, which automatically revokes certain provisions benefiting a former spouse upon divorce under SDCL 29A-2-804. That said, this revocation does not extend to all asset types.
The Danger of Outdated Beneficiary Designations
Beneficiary designations on IRAs, 401(k) accounts, and life insurance policies override whatever your trust says. If you named your former spouse as beneficiary on a retirement account during your marriage and never updated it, that account may still go to your former spouse.
Your current spouse and children would have no legal claim to those funds. Reviewing beneficiary designations every three to five years, or after any major life change, is one of the simplest steps in trust funding and estate maintenance.
Mistake 5: Not Naming a Successor Trustee
What Happens When No Backup Exists
Your trust names a trustee to manage and distribute your assets. If that trustee is you, the trust also needs a successor trustee who steps in if you become incapacitated or pass away.
When no successor is named, or when the named successor has died or is unable to serve, your family may need to petition the court to appoint someone. That court process adds time, legal costs, and uncertainty to a situation your trust was designed to prevent.
Under SDCL 55-1-4, an express trust is created by the words or acts of the trustor. Naming a competent, willing successor trustee is one of those acts. Choose someone who understands your wishes and name a second backup in case the first cannot serve.
Mistake 6: Ignoring How Assets Are Titled
Bank Accounts, Real Estate, and Investment Accounts
Titling is the mechanical side of estate planning that most people overlook. Each asset you own has a legal title, and that title determines who controls the asset at your death.
If your bank account is titled in your personal name, it passes through probate. If it is titled in the name of your trust, it passes directly to your beneficiaries. Real estate in South Dakota requires a recorded deed to transfer ownership into the trust, and investment accounts require a registration change with the brokerage firm.
When Titling Conflicts With Your Trust
Problems arise when your asset titles say one thing and your trust says another. If your trust directs that your home goes to your three children equally, but the deed still lists you and one child as joint tenants, the joint tenancy designation wins.
Trust funding is not a one-time event. Every time you acquire a new asset, open a new account, or refinance a property, you need to confirm the title aligns with your trust.
Mistake 7: Forgetting the Tax Picture
South Dakota’s No-State-Estate-Tax Advantage
South Dakota does not impose a state-level estate tax, which gives families here an advantage that residents of states like Massachusetts, Oregon, or Illinois do not have. Federal estate taxes still apply to estates that exceed the current exemption threshold.
The Federal Exemption You Need to Know About
Under the One Big Beautiful Bill Act signed in July 2025, the federal estate tax exemption is now permanently set at $15 million per individual, or $30 million for married couples, starting January 1, 2026. That threshold is indexed for inflation going forward.
For most South Dakota families, federal estate tax is not an immediate concern. The bigger tax issue is what your heirs owe when they sell inherited property.
Here is a simple example. Say you bought farmland for $50,000 thirty years ago, and today it is worth $300,000. If your heirs inherit that land through a properly structured trust, the IRS treats them as if they bought it at $300,000. They can sell it the next day and owe zero capital gains tax on that $250,000 increase.
If you gift that same land to your children while you are alive, they inherit your original $50,000 purchase price. When they sell for $300,000, they owe capital gains tax on the full $250,000 difference. That one decision can cost your family tens of thousands of dollars.
Common Questions About Estate Planning Mistakes in South Dakota
What is the most common estate planning mistake?
Failing to fund a trust after creating one is the most overlooked mistake. Many families invest time and money into building a trust, then never complete the transfer of assets into it. Without trust funding, the trust cannot do its job.
Does South Dakota have a state estate tax?
South Dakota does not impose a state estate tax. Federal estate taxes apply to estates exceeding $15 million per individual as of 2026 under the One Big Beautiful Bill Act.
What happens if I die without an estate plan in South Dakota?
Your assets pass through intestate succession under SDCL Title 29A. The state determines who receives your property based on family relationships, not your wishes.
How often should I review my estate plan?
Review your plan every three to five years, or immediately after a major life event such as a marriage, divorce, birth, death, relocation, or significant change in assets. Beneficiary designations on retirement accounts and life insurance should be checked on the same schedule.
Can I fund a trust myself, or do I need professional help?
Trust funding involves retitling accounts, recording new deeds, and updating registrations with financial institutions. Working with a professional ensures nothing is missed and every asset is properly transferred.
How to Avoid Estate Planning Mistakes in South Dakota
Every estate planning mistake on this list has one thing in common: it is preventable. The gap between having a plan and having a plan that actually works comes down to trust funding, correct titling, updated beneficiary designations, and regular reviews.
ND Estate Services helps South Dakota families build and fund trusts that protect what they have worked for. Mark Wagner meets with families in their homes to walk through every step, from creating your revocable living trust to retitling each account, updating each deed, and confirming every asset is properly funded.
Schedule a consultation with our South Dakota office to discuss your situation.