Everyone has heard of some sort of do-it yourself estate planning software; whether it’sRocket 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 documents 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:
3. 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 spent 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.
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.