Why do people try “do it yourself” estate planning, knowing in the back of their mind that it may not work? Well people see the upfront cost of doing their planning that way as very attractive to them. However, they often do not think about the total cost to their families if their “DIY” planning does not work.
Often times when I meet clients for the first time they show me their current wills and powers of attorney. They will often present them to me with a sense of hesitation and nervousness. Why are they hesitant? Because often times they used a software program or online website to draft their own documents and know that there is a very high likelihood that those documents may not have been drafted properly.
One of the first pitfalls of do it yourself planning is most people are no familiar with some of the specific legal terms that are included in these documents. The terminology that is used in estate planning documents is highly specific and needs to be tailored to each individual’s plan so that it accurately describes what that individual’s wishes are. IF there are errors or omissions with this specific language then there could be any number of unintended consequences such as unintentionally disinheriting someone, allowing someone to inherit, or to inherit more than what you intend.
Another pitfall comes with the complexity of modern families. With the divorce rate in the United States being around 50%, it is a reality than many of you will have second marriages and often children from one or both of those marriages. These family situations can drastically change how a person would like their assets to be divided upon death and it is important to consult with an attorney to discuss the consequences of different scenarios.
Some other consequences that Do it yourself planning may not address are tax consequences. In Maryland there is both an inheritance tax and an estate tax. A carefully drafted plan will address both of these taxes appropriately for each person’s situation.
Even if someone is able to get all of the provisions correct in their estate planning documents and able to make sure that their ultimate distribution of assets is done in a way that they are happy with and minimizes taxes, one all too common problem is that many times do-it-yourself documents are not executed properly. If a document such as a will or power of attorney, is not executed properly, it is not valid will not work as intended. This may cost the client, or the client’s family a lot more money down the road to file for guardianship, or probate an estate with no will.
Although Do-It-Yourself planning seems like a cost-saving measure in the short term, it is important to consider all of the long term costs to you and your family.
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