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Do-it-yourself estate planning: Why you should think twice

by Christine Schafer | Contributor
April 1, 2020


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A do-it-yourself approach to estate planning is full of perils that can lead to unintended consequences, additional burdens for your family and costly disputes over your intentions.

With so many options available for the do-it-yourself approach to estate planning, it may be tempting to save extra money and create your own plan while sitting in the comfort of your own home. To make this option even more attractive, we now have various search engines that can provide us with information on any topic with the click of our mouse. Yet, is this do-it-yourself approach to estate planning really worth the perceived upfront savings?

Should I create my own estate plan?

While you can do it yourself, it is risky and can become a very costly substitute for planning with an experienced attorney. One of the most important parts of the estate planning process is the fact-gathering session. During this time, a lawyer will review your financials and a list of your assets, and they will listen to your goals and ask a series of important questions. The online programs or templates that are available will also ask you a series of questions, but there are significant limitations when it comes to gathering this important information. These deficits can then result in defects that will not be apparent until after your death, leaving your family to face a legal and financial burden.

What can go wrong if I create my own estate plan?

Unfortunately, a lot can and does go wrong with the do-it-yourself approach to estate planning. The documents may fail to meet the execution requirements established by state law or be drafted in a way that results in unintended consequences after your passing.

Details are crucial with estate planning and while they can work in your favor, they may also work against you if the documents are not drafted properly. For example, you may leave a certain asset or a specific percentage of your estate to a named beneficiary, but then fail to leave further instructions on what is to take place if this beneficiary has predeceased you. This may result in the asset or percentage of your estate passing to an unintended beneficiary.

Furthermore, including certain language in your estate plan can actually destroy the homestead exemption on your home. For example, the Florida homestead exemption protects you from certain creditor claims while you are alive, and this protection can pass on to certain beneficiaries after your death. Yet, if this exemption is destroyed then the home which would have passed free from potential creditor claims to your loved ones is now open to the claims of your creditors.

Many individuals don’t realize that they can actually craft an estate plan that will protect their adult children from the negative financial consequences of lawsuits, divorce and other creditors. One reason the revocable living trust is such a popular estate planning tool is that it allows for the creator (i.e. you) to put restrictions in place such as ensuring the inheritance you leave behind is protected against the beneficiary’s creditors as we mentioned. If drafted properly, a trust can also protect a young or irresponsible beneficiary from overspending, provide for a special needs beneficiary without impacting their government benefits and more. This type of planning cannot be accomplished through an online template, and even if you attempt to achieve a comprehensive plan on your own, you face the possibility of costly mistakes later in life.

One last major pitfall with attempting to do-it-yourself with estate planning is not properly planning for a blended family. A blended family is created when someone marries but has children from a prior relationship or previous marriage. This type of situation requires careful planning to ensure that your children are not left short-handed or completely disinherited. Not all families look alike which is why the options available in a do-it-yourself system will likely not provide the solutions necessary to achieve your goals.

Other issues that typically arise when someone has drafted their own estate plan included:

  • Failing to account for future children.
  • A beneficiary unintentionally receives less of an inheritance.
  • Revocable trusts that are not funded with your assets resulting in probate administration.
  • Not addressing federal estate tax concerns.
  • Not considering and planning for the distribution of out of state real estate (which will likely be subject to ancillary probate administration).
  • Choosing individuals that aren’t qualified as your trustee or personal representative.
  • Not planning for the distribution and care of your pets.

Why do I need an estate planning attorney?

Attempting to create your own estate plan may actually lead to a false sense of security. It might appear as though you have everything in order, but the issues from an improper plan will arise after your death and leave your family in a stressful situation. An experienced estate planning attorney not only understands the law and how it applies to your specific family dynamic, but they also have real-world experience necessary to ensure your wishes are honored after your death. Estate planning attorneys are trained to create a plan that will accomplish your current goals while also planning for potential future conflicts that you may not consider.

The truth is, no matter how good the do-it-yourself estate planning documents may appear on their face, there is no substitute for personalized legal advice. Estate planning is about you, your family, your future – it is much more than just document production. The right legal solution exists and can be achieved after thoughtful conversation and with the assistance of an experienced estate planning attorney.

How do I create an estate plan?

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life’s contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

Alliance America can help

An Alliance America financial advisor can assist you in maximizing your retirement resources and help achieve your retirement goals. Alliance America’s planning process is focused on personalized retirement income planning. As fiduciaries, our advisors are required to act in your best interest, and we are dedicated to helping you achieve the retirement lifestyle you seek. You can request a no-obligation consultation by calling 888-864-2542 today.

Income

Sources of income – whether derived from investments, Social Security or ongoing employment – are pillars of a sustainable and successful financial plan.

Growth

We need to expand our capacity, capability, creativity, understanding, sense of self and financial rewards as we progress through life and evolve as a person. We grow by striving to be better and reach our full potential.

Expense

A qualified fiduciary can help you plan for and manage the variety of other expenses you’ll face in retirement, whether paying taxes or simply ensuring that your costs of living are met.

Assets

The total of all your assets is important to know, but it’s only part of your considerations. Whether you are just starting out saving modest sums for retirement, you need a personalized plan to provide for your needs in life.