Potential Risks of DIY Estate Planning?
With the emergence and growth in popularity of online DIY estate planning tools, you may consider these as an option hoping to save some money and time. A quick search on the internet can bring you to many companies offering to set up an estate plan in minutes, in “three easy steps,” to protect your assets and help “minimize the chances of a contest” over your estate.
Although these documents may seem ok, they can lead to significant problems in the future.
Unfortunately, these “fast” and “simple” solutions often result in invalid, ambiguous, or contradictory plans, which are more expensive in the long run and create confusion and heartache for the ones you are trying to protect.
DIY Estate Planning Has its Risks
DIY estate planning is risky for what the plans offer – and don’t offer. They typically feature wills as the centerpiece of your plan. Although this document is important, a basic will does not prevent your assets from going through probate, or protect them against third-party claims or creditors.
DIY estate plans don’t offer these 8 important safeguards:
1. Tax Saving Strategies – A basic DIY plan will likely not provide tax savings or avoidance. They are often less flexible in providing contingencies or conditions for the distribution of your property to loved ones.
2. Counsel on Elements Best-suited for You and Your Family – A professional who understands trusts can help you navigate whether you need a revocable or irrevocable trust – or both.
3. Advice on Proper Categorization of Assets – A professional will help you categorize your assets, determine which assets avoid probate, and which assets may be best suited in a trust to protect you and your loved ones during your life and after you are gone.
4. Safeguarding Your Will – An attorney who drafts your plan often can store and safeguard your will so it is not lost. Many states have a presumption that a misplaced will is destroyed.
5. Dispute Assistance – If a dispute arises, an attorney will be available to explain or even testify to your intentions.
6. Advice and Support for Updates When Laws change – Even though DIY websites could have attorneys create the boilerplate templates, their service ends when they are delivered, and are unlikely to be updated to address changes in the law.
7. Assurance That Legal Requirements are Met – States, and different estate plan documents, often have specific requirements for execution, notarization and witnesses. If done improperly, simple mistakes can negate all of your hard work. Working with a professional to draft and help execute your estate plan will help ensure that your intentions, legacy, and documents will be upheld when the time comes.
8. Analysis of Competing Provisions – Estate planning can often be complex, with many provisions impacting other provisions in a document. Without a proper understanding of the document, these contradictions may lead to ambiguity and mistakes. A DIY estate plan may not catch these conflicts if not drafted correctly.
The one-size-fits-all approach of a DIY plan may give you a false sense of security because it was done quickly and inexpensively, but in the end, you may leave your family to clean up the mess.
DIY Estate Plans Just Don’t Keep Up With Life Changes
In our experience, most families have many changes in either their assets, dynamics, relationships or health over time. An estate plan created online may work for you and your family when it was initially drafted, but it doesn’t grow and change with your family. Life experiences are constantly changing; there are new family members, divorces, disabilities, and unfortunately, deaths.
How Can Changes Impact Your Plan?
Lifetime Often Create Inequality for Heirs – Gifts may be made to beneficiaries during their lifetime, which you may want to be counted in your final distributions. Without such a specific provision in your plan, it may be very difficult to accomplish.
Changing Asset Valuations Can Create Unintended Imbalances – What happens if your will designates specific property to specified heirs, but over time, one asset grows while another is depleted? These imbalances could result in unanticipated unequal distributions at death.
Divorce Can Negatively Impact Expectations - If a couple gets divorced, but may not address who will receive the distributions instead.
Shares Passing Suddenly to a Minor Child - Without proper planning, a court may have to get involved to determine who may act as a guardian for the child’s assets.
These, or other life changes, could destroy family relations, have inadvertent unequal distributions, and possibly expensive or hostile litigation.
If instead, you work with a professional to draft your estate plan, they can help provide advice about difficult decisions. They can address unknown future challenges and continue to support your estate plan as issues arise.
Although the prospect of saving time and money is tempting, avoid DIY estate planning horror stories. In the end, a DIY plan may cause your loved ones additional confusion, expense, and stress. An estate plan carries your legacy and has lasting emotional and financial consequences on your loved ones.
Look to us for support - now, and into the future.
At TrustCounsel Law we provide every client with a personalized, professionally drafted estate plan designed to protect them, their loved ones, and the legacy they’ve worked their entire life building.
It is our great honor to provide this service to our community. We truly appreciate the opportunity to be of service to you and your families.
Call (949) 505-9494 for a no-cost consultation.