Is DIY Estate Planning a Good Idea?

diy estate planning

Let’s be honest: you didn’t really expect a blog post on a law firm’s website to tell you that DIY estate planning is a good idea. As estate planning attorneys, a large part of our business comes from individuals who ask us to create an estate plan for them. It’s obviously not in our best interest for you to choose a DIY estate planning option. But perhaps less obviously, it’s also not in yours.

We understand the temptation of DIY estate planning. It’s less expensive than paying a lawyer. It’s convenient; you can do it from the comfort of your home or office. You can change your plan whenever you want, with a few keystrokes. And did we mention it’s less expensive? For the price of a software program or access to a website, you can become your own estate planner. What could go wrong?

The good news is, you may never find out the answer to that question. The bad news is, the people you leave behind probably will.

DIY Estate Planning Has its Risks

The reason you may not discover the flaws in your DIY estate plan is that they probably won’t become apparent until you die or become incapacitated. By that time, of course, it will be too late for you to do anything about it, and your loved ones will be stuck with whatever mess you have created.

There are three fundamental problems with DIY estate planning. The first is the risk of unintended consequences. Let’s say you want your adult son to inherit your house when you die, and you also want to keep the house out of probate. You’ve read that the easiest way to do that is to make your son a joint tenant on the property. Mission accomplished, in that your son will indeed take your house outside of probate at your death.

But your action could also lead to a result you didn’t intend. By making your son a joint tenant during your lifetime, the property becomes vulnerable to his creditors or to his spouse should they divorce. Your son could also borrow against his interest in the property, risking foreclosure. It can also result in unnecessary capital gains taxes having to be paid. In short, DIY estate planning tools often tell you how to achieve a goal, but not the risks of doing so in a particular way. With estate planning, a little knowledge is a dangerous thing.

The second problem with DIY estate planning is that laws change, as do life circumstances. If you don’t become aware of legal developments, or neglect to update your estate plan as your needs change, you could unintentionally disinherit heirs, leave property out of your estate plan, pay more than you need to in taxes, or leave your heirs in a probate battle over your intentions. An estate planning attorney can keep you posted regarding changes to the law. .

The second problem with DIY estate planning is that laws change, as do life circumstances. If you don’t become aware of legal developments, or neglect to update your estate plan as your needs change, you could unintentionally disinherit heirs, leave property out of your estate plan, pay more than you need to in taxes, or leave your heirs in a probate battle over your intentions. An estate planning attorney can keep you posted regarding changes to the law. .

The third problem with creating your own estate plan is simply that you don’t know what you don’t know. A will or other estate planning document might look complete to a lay person reading it, but could leave out critical information.

For instance, radio personality Larry King’s handwritten will purports to leave his estate in equal shares to his children. But it does not say who should serve as executor of the estate. Nor does it mention the quarter of a million dollars his eldest son, Larry Jr., borrowed against his eventual inheritance; should his share of the estate be reduced by the amount of his debt? Or should his siblings effectively subsidize his borrowing? A lack of clarity in an estate plan often leads to extended, costly probate litigation — and not just for the rich and famous.

Why You Need an Estate Planning Attorney

An estate plan is much more than a document with blanks that need to be filled in. An estate plan should be a partnership between you and an experienced estate planning attorney. You bring to the table what you know best: your family and its needs. The attorney brings his or her knowledge of applicable estate planning law and tools. Together, you create a plan designed to meet your family’s unique needs. An estate plan should, at a minimum, plan for the possibility of your incapacity during your lifetime and arrange to distribute your assets after your death.

But depending on your circumstances, your estate plan may need to do more. Consider the following questions:

  • Do you know who would make medical and financial decisions for you if you were unable to make them for yourself?
  • Do you need to plan for a family member with special needs?
  • Are you concerned about estate tax?
  • Is it important to you to protect your children’s assets from creditors, including a spouse in divorce?
  • Do you want your children to have access to their entire inheritance when they turn 18?
  • Do you want to prevent all your assets from being spent to pay for your nursing home?
  • Who would care for your pet if you died?
  • Do you have minor children who will need a guardian? What happens if the guardian you have in mind cannot, or will not, serve when the time comes?

An experienced estate planning attorney can help you explore needs you may not know you have, and avoid estate planning pitfalls of which you may not be aware. The money you save making a DIY estate plan may well be lost to litigation, taxes, nursing home costs, or creditors if your plan has flaws. Accordingly, you should consider the cost of a professionally prepared estate plan an investment, not an expense. We invite you to contact our law office to learn more.

Categories: Estate Planning
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