Risks of Do-It-Yourself Estate Planning, Part 1: No Do-Overs
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:
1. There Are No Do-Overs
I 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.
Philip J. Ruce 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.