Do-It-Yourself Estate Planning: An Inadvisable Approach

The internet allows us to do almost anything in the modern age. From at-home grocery shopping to having artificial intelligence write book reports, the possibilities are limitless. This has given many people the idea that they can handle complex legal issues on their own. Unfortunately, there are many common legal mistakes made in do-it-yourself estate planning.

You can head to any DIY legal website and download a variety of forms. If you talk to actual legal professionals, though, they typically advise against this approach. There is no one-size-fits-all approach to estate planning, and a single mistake can make any legal arrangement you create null and void. If you’re considering DIY estate planning, make sure to avoid the following errors.

Using Generic Templates

One of the biggest mistakes people make during DIY estate planning is using generic templates they find online. Many assume that — since they’re paying for an online service — they’re guaranteed some level of accuracy and service. This is far from the truth.

Online templates for wills, trusts, powers of attorney, and other estate planning documents typically do not account for specific state laws or your own individual circumstances. Without the customization necessary to reflect your individualized needs, there’s a great chance that legal challenges could arise.

Even worse, many of these documents will not meet the requirements laid out by individual states. Every state in America has its own estate planning rules, and a DIY legal form you find online will likely not account for these differences.

Failing to Update Their Estate Plan as Circumstances Change

When someone takes a do-it-yourself approach to estate planning, it’s typically because they’re trying to save money. Unfortunately, these individuals often don’t realize that estate planning is not a “one-and-done” process. Any estate law professional can tell you that these plans need to occasionally be reviewed and updated.

Significant life events — including marriages, divorces, childbirth, acquiring new assets, and family disputes — can create the need for an updated estate plan. Many DIY estate planners fail to make such updates, which can lead to outdated provisions that no longer reflect their wishes. Additionally, new state laws could change the requirements of an estate plan.

Improper Execution of Documents

There will be times when DIY estate planners go the extra mile and make sure the documents they download online are the ones they need. This is a great first step, but there are still a variety of common mistakes made during do-it-yourself estate planning — and improper execution of documents is one of them.

Even if you fill out all legal documents appropriately, there are still requirements for execution. This could include formalities ranging from witness signatures to having a document notarized. Improperly executing an estate planning document can make it fully invalid. In turn, this can result in unforeseen issues during a challenging probate process.

Failure to Consider Beneficiary Designations

There are many strategies for handling estate planning. Unfortunately, do-it-yourselfers often fail to coordinate these strategies. For instance, a person may fail to align their estate plan with beneficiary designations that they already have in place. Such a designation could override the terms of any estate planning document, resulting in an unexpected asset distribution.

For example, imagine a scenario where you’ve listed your partner as the beneficiary on your bank account. Even if you say in your will that you want your money split evenly between your partner and children from a previous marriage, this might not happen since all money in your bank account will go directly to your partner. It’s essentially their money at that point.

Those who take a do-it-yourself approach to estate planning also frequently forget to update their beneficiary designations after significant life changes. Working with a legal professional is a great way to avoid such mistakes. An attorney can make sure you’re “checking all the boxes” when it comes to creating a valid and enforceable estate plan.

Failing to Consider Tax Implications

Even individuals who manage to avoid most of the common mistakes made during DIY estate planning typically forget tax issues. While most of us are only used to dealing with taxes for work and properties, there are also federal and state gift and estate taxes that your estate will have to contend with. Without proper planning, significant tax liabilities could arise.

This can greatly reduce the value of the estate left to your heirs. You could even face unexpected capital gains or income taxes for your beneficiaries if you incorrectly transfer assets without careful consideration of the tax implications. This is clearly one of the most complex areas of estate law, so you’ll likely benefit from seeking assistance with these issues.

Should You Handle Your Own Estate Planning?

Clearly, there are a variety of mistakes that people make when handling their own estate planning. Unfortunately, the errors listed here are just the tip of the iceberg.

An individual who lacks legal experience will likely not understand all the nuances of estate law, and no boilerplate document on a DIY legal website is going to account for your individual circumstances.

This is why most legal professionals advise against using any do-it-yourself legal website. However, this is even more critical for estate planning. After all, many mistakes in this area are not recognized until after a person passes – and by then, it’s already too late. Steering clear of the common legal mistakes in DIY estate planning can help you avoid intestate succession.

The legal team at Beeman Heifner Benge P.A. can help in this process. Contact us at 765-684-4355 to discuss your options and start planning for the future today.