In the wake of COVID, many of us are getting serious about putting our affairs in order.
Many people across the country, maybe for the first time, have thought about planning their future in a way that will allow them to efficiently pass on their assets and care for their dependents.
The only problem is that they’re saying, “we need a Will”, and in the very same breath they’re also saying “hmm, an estate lawyer is expensive, let’s download a free Will online and get it done”. The logic seems sound; after all, we’re used to going online for everything so it makes sense that all the information and tools we could possibly need for creating our own estate plan are online too.
Well, as most attorneys will tell you, yes and no.
There are definitely a few cases where a simple Will can suffice, but for most people, there are significant legal and financial implications that a free online will generator simply won’t be able to cover. In one review by Consumer Reports, three DIY will software options were tested and analyzed with the help of a specialist law professional. All three were found to be inadequate unless a very simple plan was required.
So, while it might cost under $100 to get your DIY estate plan done and dusted, if it doesn’t pass muster, your estate might be in for some expenses later. And the worst part is, it’s your family that will discover your error in the midst of their grief while trying to follow your wishes.
Think about it this way, if setting up an estate plan could save your family thousands of dollars and hours of time (not to mention the emotional cost of a drawn-out distribution process), why wouldn’t you allocate some resources upfront to get the job done correctly?
Let’s take a look at the five main dangers of a DIY estate plan:
1. A Will is Not an Estate Plan
Most people think that all they need is a Will, and once that’s done they have an estate plan in place. Unfortunately, Wills are only one part of a robust estate plan so even if you draft a DIY will that is valid and meets the state requirements, it’s likely that it won’t be enough to address your estate planning needs. In California, a will guarantees that your estate will have to go through probate.
While a valid will ensures that your estate will be distributed per your wishes, the distribution will be under the supervision of the probate court. The requirements for a valid will vary depending on how the will was generated (handwritten or online document generator). Witnessing of wills is a key component in creating a valid will. An estate planning firm will ensure that you have everything completed all the formalities properly so that your will is valid under state law.
2. Your Estate Plan May Not Fulfill Your State’s Legal Requirements
Estate planning law is determined by each state, and the applicable requirements can vary widely. Unfortunately, a DIY estate plan that you download off the internet may claim to conform to your state’s law, but it may not and there’s no real way to check on your own. There’s also an additional complication if you own property, a business. or other assets in another state (or country). This additional level of complexity (as you navigate different laws and requirements) means that your DIY estate plan won’t be able to offer sufficient coverage.
Most sites that offer do-it-yourself estate planning don’t take any responsibility for their documents if they fail to work when your estate is wrapped up. In comparison, an estate planning law firm takes full responsibility for the documents they draft and will be available to assist if there are any issues that arise. They can review notes taken during their meetings with you and are available to testify to your intentions should it become necessary.
3. There Are No Checks and Balances
Often a DIY estate plan is generated on the basis of a questionnaire that you fill out online. There’s a good chance that you might make a mistake and select the wrong option, or forget to include something important. You may also opt to include additional information that could be contradictory to what is already included in the template and, because you’re not being guided by a professional, this could mean that your plan won’t accomplish your goals. You might even forget to include certain assets in your estate plan.
An estate planning attorney is there to ensure that you have all your ducks in a row. They will help review all your investments, properties, and other assets to ensure that everything has been included and that every single detail is correct.
4. One-Size-Fits-All Does Not Apply to Your Legacy
If you’re doing a DIY estate plan, it means that you’re not getting advice on how to optimize your strategy. In many cases, a Trust will be a better estate planning tool than a Will, but it might be something that you don’t consider because you don’t know about it, or it may seem unnecessary (or even too confusing).
Often an estate planning law firm will suggest using a Trust to avoid the probate process which will save your beneficiaries a lot of time and unnecessary expense as it allows you to transfer your money and property after you pass away. DIY Trusts are an option, but the proper process must be followed, and you will need to fund it (transfer title of your money and property into the name of the Trust). If you fail to take this vital step, the Trust will be ineffective, and your heirs will still have to go through the probate process. In California, estates worth in excess of $166,250 is subject to probate, even if you have a will. The only way to avoid the probate process is to create and fund a revocable living trust. An attorney can ensure your revocable living trust is tailored to your needs and wishes.
5. Changes to Your Circumstances
Life happens, your circumstances may change, and different scenarios might arise that you could not have foreseen when you were drawing up your estate plan. When this happens, you may forget to update your plan, or you may opt to make DIY changes:
No Updates to Your Plan
You might have created a will that stipulates everything should be left to your two children, but you may have had a third child (and forgotten to update your Will), what happens then? Does the third child not inherit anything? Or, if your children are older and one has accumulated a lot of debt, maybe the assets you pass on to them are vulnerable to claims from their creditors, do you have a plan in place to ringfence your assets? In some cases, a beneficiary may have the family home bequeathed to them. If the property is sold before your passing and the Will isn’t updated, is it your intention to have that beneficiary inherit nothing?
Also, depending on what you have included in your DIY estate plan, there’s the possibility that you may not have transferred additional assets that you have acquired into your Trust. What happens then? If property titles and other assets have not been transferred to the Trust, they must go through probate.
It can be tempting to type up your own changes to your estate plan and have those notarized. Unfortunately, a Notary Stamp, in and of itself, can’t make the document legally binding, it simply means that you proved your identity to the Notary Public and they watched you sign the document. If there is unintentional ambiguity in your wording, it could mean that your estate will need to go through the probate process.
In contrast, if you use an estate planning attorney, once you have an estate plan in place, they will set up ongoing reminders to ensure that your plan remains up-to-date and accomplishes your goals.
These five dangers translate into some serious legal consequences in that:
- Your heirs may have to prove to a court that when the Will was created the necessary legal formalities were observed.
- Your estate may be subjected to additional taxation that could have been avoided with careful planning.
- Inappropriate gift-giving may cause your heirs to lose government benefits or may be used to settle creditors.
Too often estate planning is thought of as a once-off. All you need to do to ensure that your affairs are in order is to download a template will, fill it in, get it witnessed, then stash it in a drawer where it will sit unread for the next twenty or more years.
But for full peace of mind, you need an estate plan drawn up by a professional that is the right fit for your specific situation. An experienced estate planning attorney will help you through each step of the process, from assisting with drawing up a comprehensive list of assets to advising on the best vehicles for passing on those assets to your beneficiaries. They will also check in with you periodically to ensure that nothing has changed and that your estate plan still accurately reflects your wishes.
The reality is that DIY estate planning often costs more in the long run because, in saving a few hundred dollars upfront, the ensuing confusion and ambiguity may result in thousands of dollars in legal fees further down the line. Grieving family members have enough to deal with as they come to terms with their loss, you don’t want to add the stress of an endless, expensive probate process on top of that.