While we fully support online resources for boilerplate, legal planning such as Advanced Medical Directives, DIY estate planning is not a good idea. In addition to missing key legal loopholes or fine print issues, you could cost yourself – and your heirs and beneficiaries – thousands of dollars and a big headache when it’s time to settle your estate.
The reality is that basic estate planning is affordable, often costing as little as $500 or less, and the result means invaluable peace of mind for you, your executor and your heirs when it’s time to settle your estate. Plus, we may find ways to set your estate up so you reap the rewards of tax savings and optimized finances in the present – as well as the future.
5 Ways DIY Estate Planning Gets You Into Trouble
Here are just a handful of the ways DIY estate planning gets you into trouble – or causes major challenges, hurdles, and headaches for your executor, heirs, and beneficiaries down the road.
1. Your estate is probably not one-size-fits-all
Any offers or website pages or software programs you find geared for “DIY Estate Planning…” are one-size-fits-all arrangements. They don’t know anything about you, your lifestyle, your current assets (perhaps even assets you don’t know you have), your tax knowledge, and so on.
As a result, you can wind up “settling” your estate in ways that don’t make sense in the big picture. You could miss out on some of the clever ways to protect unique or unusual estate features, and basic software programs often leave out important information, including the potential need for backup or contingency executors/beneficiaries. Most importantly, DIY legal programs don’t continue to check in with you to assess whether your needs/wishes here in 2019/2020 are the same as they are in 2015, 2030 and so on.
2. You probably need more than just a will
The general population uses the terms “will” and “estate plan” interchangeably. Legally, however, these are two separate things. While you may be able to generate a very general will online, it is by no means an estate plan.
For example, a “Will” contains the instructions for what will happen after you die – but does nothing for the here and now, or future possibilities. An estate plan takes into consideration:
- Current assets and investments
- Current/prospective financial plans – including funding college funds, retirement, disability allowances, mortgages owed and due dates for payoffs, etc.
- Current/future tax responsibilities, including what portion of the estate needs to be set aside to pay taxes
- Bequeaths after you die
- Prospective benefits of a living trust
- Advanced medical directives
- Healthcare Power of Attorney (POA)
- Financial Power of Attorney
- And the list continues
For most, these items are too complex individually and each one offers multiple options/paths, depending on what the future holds. That’s impossible for DIY programs to competently address.
3. You put loved ones at risk for legal disputes
A well-planned, legal estate plan is detailed, transparent and legally filed. This makes it virtually inarguable in the eyes of the law. Creating will or trust documents on your own means leaving yourself vulnerable to any mistakes, careless wording, or missed fine print, and this can lead loved ones into the courtroom to settle potential disputes.
4. You typically spend far more money
“Saving money,” is the #1 reason most people are drawn to DIY estate plan offers. The irony here is that proper estate planning often saves thousands of dollars in tax fees now, and will almost indefinitely spare your heirs/beneficiaries from paying taxes unnecessarily after you die. So the very minimal investment you pay a lawyer to properly plan your estate saves you exponentially later on.
5. It’s complicated
The laws change all the time, so estate plans are living documents – part art, part science and part legal/tax compliance. This is more than any one-time software program or website form(s) can account for. Estate lawyers know current estate laws/regulations, follow them in real-time, and maintain your estate plan to it remains relevant and legally sound.
Interested in learning more about why an estate plan established and filed with a qualified estate lawyer beats a DIY version every time? Schedule a free consultation with Tseng Law. We’re a family-friendly, estate law firm dedicated to making estate planning approachable and affordable.