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Can I Do My Own Estate Planning?

The combination of tightened budgets and an abundance of readily available DIY estate planning software has led many to believe this might be a project they can tackle on the their own. Although experts generally agree there are a very few aspects of estate planning you could possibly do on your own, for the most part, do-it-yourself estate planning is very unwise.

As an example, if the only documents you are planning to include in your estate planning efforts are an advanced healthcare directive (also called a health care proxy), or possibly a HIPAA release (Health Insurance Portability and Accountability Act), then you might be able to successfully complete those forms and be just fine. The problem lies in the fact that these two documents are really just the tip of the iceberg as far as what most all adults need to include in their estate planning.

How Mistakes Could Derail a Durable Power of Attorney

Consider a durable power of attorney, which some people do choose to prepare on their own. This document allows others to control your finances when triggered by a specified event—perhaps your incapacitation, or even something as simple as your being unavailable for a real estate closing.

The problem lies in the fact that you could inadvertently grant unlimited access to your finances if the durable power of attorney has even one simple mistake in it, or if you are not clear in the document on what event will “trigger” it. Suppose you choose a relative simply because they are related to you, then it turns out that person really does not have your best interests at heart—but it is too late for you to do anything about it.

Wills and Trusts—DIY or Attorney-Prepared?

Although you can also download wills and trusts, doing this on your own is truly risky. Just as with a durable power of attorney, one single mistake can completely invalidate your entire will or trust. Only a few states recognize holographic (handwritten) wills, and most states require one or two witnesses, as well as some evidence you are competent and not under any type of duress. Far too many people believe that a single mistake in these documents will not change your basic wishes, but this is just not true.

Understanding Contractual Agreements

Ask yourself if you have a true understanding of how each and every contractual agreement you’ve entered into over your lifetime will be disbursed upon your death. Contract law encompasses bank accounts, savings bonds, pay on death accounts, retirement funds, and life insurance policies. Do you want proceeds of these contracts paid directly to your beneficiaries? Are your beneficiaries minors? If so, do you want them to be a specified age prior to receiving money? Who will manage the money until the beneficiaries reach that age? These questions and many more must be answered, and those answers must become a part of your estate planning.

Can You Make the Necessary Changes to Your Estate Plan Through the Years?

Consider whether you will be able to keep up with changes in the laws which make it necessary to update your estate planning documents. Estate tax laws change, more often than you might think.

One estate planning attorney had clients who had not updated their documents since the late 1980’s—despite his many letters to them, asking them to come in and let him make the necessary changes. When the husband died, it cost nearly $200,000 more in estate taxes than it would have if the changes had been made. In an effort to save money, this client ended up paying an exorbitant amount.

Don’t Risk DIY Estate Planning

It is not recommended that you prepare you own will or trust no matter how small your estate is. If you have a dependent with a disability, have a blended family, own a significant amount of real estate, own real estate outside your state of residence of have assets which exceed the current state tax exemption, it is critical that you have an experienced estate planning attorney prepare your estate planning documents.

In the end, an improperly planned DIY estate can cause significant hardships for surviving family members. Probate court can turn into a long, costly process that creates tension and stress among your beneficiaries, and if you are leaving minors behind, who will pay to take care of them until your estate is sorted out? This is one area where DIY could truly spell disaster, so make an appointment with an experienced Virginia estate planning attorney today.