So you want to do your own estate planning? Do a Google search for “digital wills” or “online estate planning,” and you’ll find dozens of different websites offering low-cost, do-it-yourself (DIY) and sometimes even free estate planning documents (from LegalZoom® , Rocket Lawyer® , TrustandWill.com, FreeWill.com). Not to mention the “kits” you can pick up at stores across the U.S.
These DIY sites may seem like a cheap and easy way to finally cross estate planning off your to-do list; and you may save some money by doing it all by yourself. This is exactly the kind of thinking that the DIY and online estate planning services want you to believe, but it’s far from true. Relying on DIY or online estate planning documents can be one of the costliest mistakes you will make for your loved ones.
The Real Cost of DIY
Because DIY estate plans look good, you probably won’t know what the ultimate cost to your estate and your loved ones will be until much later. Why? Because it is the substance that is critical. The forms are intended to look official and amazing. However, keep in mind, just because you created “legal” estate planning documents, that doesn’t mean they will work when you—or most importantly, the people you love—need them. Without a thorough understanding of your family dynamics, the nature of your assets, and how the legal process works upon your death or incapacity, you are likely to make serious mistakes when creating your own estate plan. It comes back to that old adage: You Don’t Know What You Don’t Know, AND then there is also You May Not Know What You Think You Know.
In the end, relying on DIY or online estate planning documents can be worse than having no estate plan at all—and here’s why:
A False Sense Of Security
Creating your estate plan using online document services can give you a false sense of security—you think you’ve got estate planning covered when you most likely do not. DIY plans may even lead you to believe that you no longer need to worry about estate planning, causing you to put it off creating a proper plan off until it’s too late.
In this way, relying on DIY estate planning documents is one of the most dangerous choices you can make. In the end, such generic forms could end up costing your family even more money and heartache than if you’d never gotten around to doing any planning at all.
At least with no plan at all, estate planning would likely remain at the front of your mind, where it rightfully belongs until it’s been handled by you and trusted counsel to guide you.
Planning To Fail
The primary purpose of estate planning is to keep your family out of court and out of conflict in the event of your death or incapacity. Yet, as cheap online document services become more and more popular, millions of people are learning—or will soon learn—that taking the DIY route can not only fail to achieve this purpose, it can make things even more complex and costly for the people you love.
Most people assume that estate planning is all about filling out the right legal documents. But in reality, the true value of estate planning is not about the documents themselves—it’s the planning aspect that’s most important, not the documents. Documents are the byproducts of the plan and the outcome of counseling and decisions that require thought, consideration, and a true understanding of all the options and their potential consequences.
Without proper planning and consideration, the documents themselves—wills, trusts, health care directives, and powers of attorney—aren’t worth the paper they’re printed on. And by proper planning, we mean having a trusted advisor who can help you anticipate all of the potential problem areas and conflicts—as well as potential opportunities—that could impact your plan, and then help you adapt your plan accordingly and create documents to ensure the maximum benefit (and minimum heartache) for your loved ones.
When done right, the value of this kind of estate planning is truly priceless because it results in the right plan for your family at the right budget for you, and it leaves your loved ones with not just a set of documents, but with a trusted advisor who will be there for them when you cannot be. And this is exactly what we provide every client we serve through our Life & Legacy Planning Process.
Let’s look at how DIY planning can go wrong by looking at five of the most common failures you are likely to encounter when using online DIY estate planning documents, instead of working with a lawyer.
One Size Does Not Fit All
“In preparing for battle, I have always found that plans are useless, but PLANNING is indispensable.” -Dwight D. Eisenhower, former U.S. President and Commander of Allied Forces during WWII
A typical set of documents that you get from an online DIY estate planning service (and even many estate plans created by lawyers) will usually include three to five basic legal documents: a will, a financial power of attorney, a healthcare directive, possibly a trust, and a legal guardian nomination if you have minor children. By now, it’s fairly common knowledge that these are the legal documents needed in case you become incapacitated or when you die.
But what isn’t common knowledge and what isn’t adequately covered by any online legal document service or even by many lawyers is what needs to go into those documents, and what’s needed to ensure those documents work for the people you love when they need them.
You see, standard documents simply cannot address the real-life complexities of your family dynamics, your assets, and the ever-changing circumstances of your life. Contrary to what the DIY services would like you to believe, estate planning is not a one-size-fits-all, once-and-done kind of deal. Even if you think your particular assets and family situation are simple, that turns out to rarely be the case, and you are likely to face one of the following issues that can leave your loved ones at risk.
5 Ways Your DIY Estate Plan Can Fail
Number 1 Way Your DIY Estate Plan Can Fail: Thinking A Will Is Enough
One of the ironic things about estate planning is that the one legal document everyone thinks they need most is the one legal document that accomplishes the least. Yes, you know you need a will, but a will alone doesn’t do much.
WHY? If you are relying on a will to do the heavy lifting, then you are guaranteeing that your family will have to file a Probate case, have a judge assigned and spend at least 9 months (and that is on a good day) in court. Relying on a will alone ensures your family and friends have to go to court when you die. And if you are alive and incapacitated, a will won’t even come into play. If you have minor children, relying on a will alone to designate their legal guardians could leave your kids vulnerable to being removed from your home, placed with human services, and into the care of strangers if you are incapacitated. Why? Because you have to die for a will to be given legal effect.
Number 2 Way Your DIY Estate Plan Can Fail: Improper Execution
You could have the best documents in the world, but if you fail to sign them, or sign them improperly, they will fail. It may seem silly, but it’s true. We’ve seen family after family who brought us an estate plan after the death or incapacity of a loved one that we were not able to support them and act upon because the documents were either not signed, or were signed improperly.
To be considered legally valid, certain estate planning documents like wills must be executed (i.e. signed, witnessed, and/or notarized) following very strict legal procedures. For example, many states require that you and every witness to your will must sign it in the presence of one another. If your DIY planning doesn’t mention that requirement (or you don’t understand how significant that fine print is) and you fail to follow this procedure, the document can end up worthless. If that happens, then you are deemed to have died without a will (legally called dying intestate) and that opens up all kinds of other problems.
If you have created or started a DIY estate plan and wish to have it reviewed, contact us to see how you can get a Family Wealth Planning Session™ at no cost to you. During this 2-hour session, we will review what would happen to your family and your assets with your current plan and discuss the best next steps for protecting your family.
In part two of this series, we will cover the remaining three ways your DIY estate plan can fail and leave your family at risk