Everyone has heard of some sort of do-it yourself estate planning software; whether it’s
Rocket Lawyer of LegalZoom, we’re lead to believe that writing your own will is a simple task that can be done online without any outside assistance.  Sadly, when these legal
Discussion between husband and wifedocuments are actually needed, it almost always results in financial and emotional headaches for family members.  In Part 1 of this blog series I discusses the nature of estate planning as it applies to “do-overs” (there are none).  In Part 2 I discussed one of the most common mistakes with do-it-yourself estate plans, which is the failure to follow your states laws for proper execution—improper signatures make your will as enforceable as a pile of scrap paper.  This week’s topic is the failure to understand the probate process, often dismissed with the following phrase:

It’s Just a Simple Will

I once heard an attorney say that “simple wills are for simple minds.” I don’t think that was meant to be as dismissive as it sounds . . . I think the message there may be if you think a will is a simple document, you may be lacking some imagination.  Consider this (absolutely true, non-hypothetical) example: An elderly mother has her basic plan in mind: she wants to divide her estate, which consists of a $300,000 house and a $300,000 bank account, evenly among her two adoring adult children.  She drafts a will where she leaves the house to her son (where he can live) and the bank account to her daughter.  That’s $300,000 each, which means things are completely equal, right?

Even if her estate plan were carried through properly, I would argue that an illiquid asset that requires maintenance and upkeep, taxes and utilities, and a real estate commission if sold is not an equal gift when compared to $300,000 in cash.  But even so, on its face, the math seems to work—it’s an even split between the two kids.  But what the mother did not take into account are the expenses she would require at the end of her life.  She spend the bank account down substantially.  At her death, the son wanted the house, and was entitled to it under the will.  The daughter believed her mother’s intent that the estate be divided equally had been defeated.

Imagine family members suing each other over a “simple” estate plan. That super-simple will became a super-awful lawsuit among family members.  It was a very easy mistake to make, a very common misconception among those trying to draft a do-it-yourself estate plan, and it’s a completely true story (Cf. Matter of Estate of Tateo, 338 N.J. Super. 121 (App. Div. 2001)).

A competent estate planning attorney will advise the client that there is no such thing as a “simple will.”  Even when a young couple comes to me and asks what I charge for a “simple will,” I have to make sure they understand that if they have minor children, they will need to appoint guardians, and they will need the will to create a testamentary trust that can accept property on their children’s behalf, since children can’t inherit property.  Add to that the desire to get favorable tax treatment for your kids from IRA and 401K plans, and you have already gone past what most consider to be a “simple will.”  There is no such thing.

An estate planning attorney will guide you and your family through what is a highly technical process.  Your intent, though simple on its face, is rarely so when it actually needs to be put into a legal document.  I love working with folks on their “simple” plans, and I promise to make the complex less so.  Let me know how I can help.

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

Do-it-yourself estate planning and document drafting is something that’s gotten a lot of attention lately; it was one of the first things I wrote about on this blog.  I revisited the issue in Part 1 of this blog series, where I discussed the big problem with do-it-yourselfers ?????????????????when it comes to estate planning documents: there are no do-overs.  If you make a mistake with your plan, the obvious nature of estate planning is that you will not be around to fix it.  This can cause expensive court proceedings and put additional emotional and financial pressure on your family during a time when they are already under an enormous amount of stress.  It also can completely capsize your planning goals.  These mistakes are the rule, not the exception; most probate attorneys will have more stories about do-it-yourself catastrophes than successes.

So what are the big things that trip up a do-it-yourself plan?  Some are obvious, some less so. This week I’ll discuss one of the most common (and most obvious) problems with these documents:

Improper Execution

A frequently cited case about do-it-yourself estate planning kits is In Re Will of Feree (369 N.J. Super. 136).  In this case, a man created his will from a do-it-yourself kit he purchased, and signed the document.  After he died the will was presented to the probate court; because the will did not have proper witnesses, it was deemed invalid, and was set aside.  The family tried to appeal what seemed to them an obviously incorrect probate court outcome; tens of thousands of dollars later it was affirmed that an improperly witnessed will is less valuable than the paper it’s printed on.  This is a typical case, and you don’t have to do a lot of legal research to find similar situations.  If you take an hour to observe some probate proceedings in Hennepin County, you won’t have to wait long to see a judge set a will aside for not having the proper signatures (but I wouldn’t recommend this as an efficient use of your time).

If an estate planning document does not have the correct signatures and witnesses, it is not an estate planning document.  A will without witnesses is not a will.  Consider if I created a “contract” for services, the gist of which is that you owe me a million dollars.  Assuming you never signed such a thing, and I tried to enforce it against you, would I succeed?  Probably not.  Intricacies of contract law aside, if you haven’t agreed to the terms of the contract, the contract doesn’t exist, even though I am holding a piece of paper that says “contract” at the top of it.  The same applies for your will: you can call it a “will” if you want to, but without the right formalities, it’s just a pile of scrap paper.

Improper execution is probably one of the easier mistakes to avoid, yet is one of the most misunderstood and one of the most common reasons a will is set aside by the probate court.  After all, the logic goes, if I put my wishes in writing, that’s what my family will do, right?  But of course it’s not up to the family — the probate process is a legal one, and in our country of laws, the rules created by the legislature are what governs.

There are a few states that recognize “holographic” wills — these are wills that are typically hand written and don’t have any witnesses at all.  Minnesota is not one of these states.  If your will is not witnessed properly, then the probate court will set it aside and will apply the Minnesota intestacy statute.

Improper execution of estate planning documents is just one of the problems probate attorneys see every day, and is probably one of the easiest problems to avoid.  Of course, an estate plan with proper signatures is still only as strong as the plan itself, and most people who write their own will tend to confuse estate plan with estate document.  They are very different things; a properly executed document that represents a poorly conceived plan could actually cause more problems than no will at all.  I’ll discuss this further in my upcoming additions to this series.  Until then, please let me know if I can help.

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

I’ve written before about the risks of do-it-yourself estate planning and document drafting.  Since then, as I’ve given more presentations and had more conversations with those who have either tried drafting their own documents or considered using a “document service” (such as Legalzoom or Rocket Lawyer), I’ve noticed a pattern of errors and misunderstandings when it comes to the basics.  Since these issues come up so often, I thought I would address them directly; this is part one of a five-part blog series on the risks of creating these complex documents without the assistance of an estate planning attorney.  The first problem on my list for do-it-yourselfers:

There Are No Do-Overs

Re-Do Red Button Redo Change Revision ImprovementI admit it, I’m a do-it-yourselfer when it comes to certain things.  As I’ve gotten a little older, I’ve learned some unfortunate truths about my handiwork.  I know, for example, that I don’t know how to put a new roof on my house.  I know that if I were to try, it would probably look ok, and it would probably mostly keep the water out.  But after one or two rains, I know I would grow frustrated and I would end up hiring someone who knows what they are doing to just re-do the whole project.  This means I would likely pay for this project twice . . . once on the cheap, and once for quality work after I realize it my own roof job didn’t turn out how I had hoped.

And who could blame me?  Why would I want to pay someone thousands of dollars to re-roof the house when I could just read a book and do it myself?  Why would I hire someone to build a fence around my yard when I can just rent the tools at Home Depot?  Why have someone sand and stain my floors when I can just do it over a summer on my own time?

The problem with this anecdote as it applies to estate planning is that once you or your family realizes the roof is leaking, it’s too late.  If you thought your health care directive would help someone make health care decisions for you, but it wasn’t executed properly, it’s too late to fix it by the time you need it.  If you draft a will and you leave money to your minor children, it’s too late to fix it once the will is probated and it’s pointed out that minors can’t own property, or that your IRA and 401K beneficiaries aren’t drafted to match the rest of your plan.  It’s too late when the probate court sets aside your documents because they had the wrong signatures (in Minnesota, if you don’t have two witnesses to your signature, your will becomes someone’s scrap paper).  It’s too late when your family realizes you didn’t update your will after your divorce, or after the birth of your new child, or after you had grandchildren.  It’s too late once it’s realized that your distribution plan has an ambiguity, and your family will be spending thousands of dollars on a formal probate proceeding, or that the person you appointed as a guardian for your children is unable to act, and you didn’t appoint a backup.

There are ways to make your estate planning goals a reality, but there is no getting around the fact that this area of law is highly technical and is fraught with ways to make things very, very difficult for your family.  Your family doesn’t need the added dose of confusion and heartache that bad legal documents will bring.  Consider carefully the benefits of having your estate planning “house” roofed properly the first time; your family will know the difference.

Stay tuned for Part Two of my blog series, where I’ll talk about the next big misunderstanding about do-it-yourself planning: Kids Can’t Own Property.  If you have any questions about your plan, I’m here to help.

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

Medical directive document in a clipboardMy earlier post on powers of attorney forms touched heavily on the issue of incapacity.  The specific question addressed by a power of attorney form is, “who will make my financial decisions and handle my financial affairs if I am unable to do so on my own?”  If a person becomes incapacitated and does not have a power of attorney form on file, it is possible that a conservatorship will have to be created to manage the finances of that person.  This is incredibly expensive and creates much unnecessary heartache for those who wish to care for their loved one; this mess can be prevented for a fraction of the cost and trouble by appointing an attorney-if-fact with a properly executed power of attorney form.

Not all decisions that must be made for an incapacitated person are financial, of course. Though care for finances is certainly important, who will decide which medications can be administered?  Who will have access to health care documents and records?  Who will get to decide if the you should be cared for in a hospital or in an assisted living facility?  Should you be visited by clergy?  What decisions should be made about life support?  Importantly, once you appoint someone to make these decisions for you, how will they understand your beliefs and values so he or she makes the right decisions?  All of these questions can be addressed by creating a valid health care directive (sometimes called a living will or an advanced directive).

Your Health Care Agent

Your health care directive is where you can appoint a person whom you trust to make the right decisions about your health care.  This person can be a spouse, family member, a close friend, or even a professional fiduciary.  It’s usually best that the person be local; if you are in Minnesota and your health care agent is in California, that person may have a tough time meeting and talking with the professionals who are providing your care.  You can (and should) also name a back-up health care agent who can act if your first choice is unable or unwilling to accept the appointment.  Married couples often (but not always) name each other as their primary health care agents, then selected a trusted sibling or parent to be the back-up.

Your Values in Print

Your health care agent will be empowered to make health care decisions on your behalf.  But what do you want them to do?  Fortunately, you can outline your wishes in your directive.  Your health care directive can specify your thoughts on life support — perhaps you wish to be kept on life support indefinitely.  Perhaps you wish that your medical professionals exhaust all reasonable means to help you recover, but you don’t want to be kept alive artificially if in their professional opinion you will not regain consciousness.  Maybe you do not want certain pain medications; perhaps you have specific wishes for clergy or other individuals to be present.  Maybe you want to have a therapy animal present when possible.  Your health care directive can provide as much information to your health care agent as you wish.

More Important Than a Will?   

I often tell my clients that a power of attorney document and a health care directive — together — are oftentimes even more important than a will because we are more likely to need these documents.  Most people have a better chance of becoming incapacitated temporarily at some point in their lives than they do of dying prematurely.  Many people recall the case of Terry Schiavo, a very sad story of a young woman whose family could not agree on whether she should be pulled from life support.  A properly executed health care directive can put your wishes in writing and avoid much family tension and heartache.

Your Plan

I often call a power of attorney form and a health care directive “everybody documents,” since really, everyone over the age of eighteen should have one.  And of course, any estate plan is not complete without incapacity planning.  A health care directive and a power of attorney form, when properly drafted and executed, can ensure you’ll receive the care you deserve in a manner that is controlled by you and is easier on your family.  Many attorneys will include these documents automatically when they draft a will or trust plan.  Please contact me if I can help.

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

Keywords: trusts and estates, Minnesota wills, revocable trusts, estate attorney, probate, estate planning

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Before my grandfather passed away, he suffered for years from severe dementia;  during his last few years he rarely understood where he was or who was around him. He wasn’t a rare case in this regard . . . worldwide, over thirty-five million people have dementia, and there are over seven million new cases each year. Alzheimer’s is the most common cause of dementia, and was certainly a cause of my grandfather’s.

When most people think of estate planning, the first document that comes to mind is usually a will. A will is a document that expresses your wishes about the property you own in your own name at the time of your death. If properly written and properly executed, your will is used to guide the court proceedings — collectively called probate — which allow your executor to distribute your things to your beneficiaries. But estate planning isn’t just about distributing your things . . . it’s also about minimizing the problems and complications that affect your family. This includes planning for incapacity, which is any period where you are physically unable to make decisions for yourself.

What happens if you don’t have a valid power of attorney form?  he answer is “nothing good.” If there is no one authorized to sign documents for you, then the court will have to appoint a conservator to act on your behalf. This is incredibly expensive; a conservatorship proceeding will run into the thousands of dollars. A power of attorney form will cost a small fraction of that amount.

There are two documents most commonly associated with incapacity planning.  The first, which will be covered by my next blog post, is a health care directive. A health care directive appoints someone (called your health care agent) to make health care decisions on your behalf when you are unable to do so. The other incapacity planning form is a power of attorney form, which is a form you sign to authorize another person (called your attorney in fact) to make financial decisions for you.

There are a number of types of power of attorney forms; the most common is a durable power of attorney, which allows your attorney in fact to make decisions for you now and after you become incapacitated. In Minnesota, there are two types of durable power of attorney forms: a statutory form and a common law form. The biggest difference between the two if someone refuses to accepts a properly drafted and executed statutory form, that person or organization can be subject to criminal and civil penalties. This is the reason most estate planners use the statutory form as their default power of attorney form.

A word of caution: once you have signed your durable power of attorney form, your attorney in fact is able to begin signing on your behalf immediately. This can be incredibly convenient if you are travelling or if you and your spouse are living in separate states due to a move or a job change. It can also be great if you have a child who has recently left to go to college and you want to be able to continue to sign their financial documents for them.  But you should make sure you appoint someone you trust, implicitly. A durable power of attorney is sometimes sardonically referred to as a “license to steal,” since appointing someone untrustworthy to manage your affairs gives them the power to do just that.  A springing power of attorney is a document that only takes effect at your incapacity; this form is not available in statutory form.

You should keep all of your estate planning documents in a safe place where people know to find them (your power of attorney form will be of little use if your attorney in fact is unable to locate it). Contact a qualified attorney to talk about incapacity planning; your family will thank you. As always, I’m here to help.

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

Keywords: trusts and estates, Minnesota wills, revocable trusts, estate attorney, probate, estate planning