Creating an estate plan is a crucial step in securing your legacy and ensuring that your wishes are honored. There are many nuances to estate planning, and though we think we know what we need, the old adage of “you don’t know what you don’t know” holds true for DIY estate planning. While some individuals attempt to handle this process on their own, there are common pitfalls that can arise without the guidance of a qualified estate planning attorney. You may be tempted to do your own estate plan, particularly if you have limited money or know you have very limited time; however, just don’t. Call an estate planning attorney to prepare these very important documents for you. I’ve seen many people’s attempts at the DIY estate planning using the documents they found online, and there have been problems with every single one. The following are the five most common mistakes of DIY estate planning.
Mistake 1 of DIY Estate Planning: Incomplete or Inaccurate Documents
One of the most significant mistakes is the creation of incomplete or inaccurate legal documents. DIY estate planning kits or online templates may not cover all the necessary elements required by your jurisdiction. For example, I reviewed a DIY will that wasn’t properly signed and notarized. Another DIY Will didn’t list an adult child’s name, not out of spite, but because the person knew the adult child didn’t “need” the inheritance. These failures and omissions can result in a Will invalidated and the wishes for your estate plan unmet. Failing to include crucial details or using outdated information can lead to confusion, disputes, and potential (and likely successful) challenges in the execution of your estate plan.
The DIY approach may seem like the cheapest and quickest way to prepare your estate plan. However, the long-term costs are much higher to you and your family if you fail to create a complete and accurate set of estate planning documents. The additional cost to your family can be in the thousands of dollars, ten times more hours dealing with the fallout from an incomplete or inaccurate plan, additional stress and confusion, and family conflict resulting in a fracturing of the family relationships. I’ve seen these results in my time as an estate planning lawyer in Alabama. It saddens and angers me, because all the extra stuff the family must deal with could have been easily avoided had their loved one properly planned.
Mistake 2 of DIY Estate Planning: Failure to Update the Plan
Life is dynamic, and circumstances change over time. Many individuals create an estate plan and then forget to revisit and update it when major life events occur, such as births, deaths, marriages, divorces, or changes in financial status. Failing to keep the estate plan current can result in unintended consequences and render certain provisions ineffective. For example, what if you have a child after your sign your Will and you haven’t accounted for “afterborn” children? Failing to do that can create many problems for your family and that child. There are also consequences for failing to update your estate plan after a divorce or new marriage. You can’t do your estate plan, lock the documents up, and throw away the key! Bring those documents out for review after every major life event and/or every 3-5 years.
Mistake 3 of DIY Estate Planning: Improper Asset Titling and Funding
Even with a well-drafted estate plan, it is essential to properly title assets and fund the trust, if applicable. (PLEASE don’t try to DIY a trust!). DIY planners often overlook this crucial step. If assets are not correctly titled in the name of the trust or if beneficiary designations are not updated, it can lead to assets being distributed contrary to your wishes, or worse, probate proceedings that the estate plan was designed to avoid. Estate planning is not just plugging your name into a document, there is a legal strategy that involves how to title your assets, designation of payable on death beneficiaries, and funding a trust.
Mistake 4 of DIY Estate Planning: Ignoring Tax Implications
Estate planning involves considerations of tax implications, including potential estate taxes and income taxes. DIY planners may not be aware of the various strategies available to minimize tax liabilities. A qualified estate planning attorney can provide guidance on tax-efficient ways to transfer assets, utilize exemptions, and structure the estate plan to optimize tax benefits. As an estate planning attorney, I cannot give tax advice, you must seek the advice of a qualified tax professional. What I can do, however, is develop a legal strategy with your estate planning documents with tax consequences in mind.
Mistake 5 of DIY Estate Planning: Lack of Professional Guidance
Estate planning involves complex legal and financial concepts. DIY planners often lack the expertise to navigate these intricacies, leading to oversights and legal pitfalls. I live in Huntsville, Alabama a/k/a “Rocket City.” I don’t attempt to tell the engineers and rocket scientists how to wire and program a missile or rocket – it’s a complex matter for which I lack the knowledge and expertise. Preparing legal documents, likewise, involves complex matters and intricacies that, if overlooked, can derail an estate plan. Without professional guidance, individuals may not be aware of specific laws and regulations that could impact the validity and effectiveness of their estate plan. A qualified attorney can tailor the plan to individual needs, ensuring legal compliance and addressing potential challenges.
Estate Planning Lawyer Huntsville
In summary, attempting to create an estate plan without the guidance of a lawyer can result in a variety of mistakes, ranging from incomplete documents to overlooking critical legal considerations. Estate planning is a nuanced process that requires a deep understanding of the law and individual circumstances. Engaging the services of a qualified estate planning attorney ensures that your plan is comprehensive, up-to-date, and legally sound, providing you and your loved ones with peace of mind for the future.
Take the next step and call Tanya at Huntsville Estate Planning Lawyer, LLC to schedule a consultation about your estate plan. Get your questions answered and documents prepared by an estate planning attorney – don’t chance this important process to DIY.
