With the wealth of do-it-yourself resources now available online, it may be tempting to try setting up your own estate plan. DIY estate planning websites and software make it easy to create generic documents like wills, trusts, and powers of attorney in a few clicks. But is the minimal cost and effort involved with DIY estate planning really worth it?
While initially appealing, attempting to craft your own estate plan without professional legal expertise has serious drawbacks and risks you should carefully consider. Read on to learn more about the limitations of DIY estate planning and why consulting an experienced estate planning lawyer at Hammond Law Group to handle your arrangements is strongly advised.
No Customization
DIY resources offer little or no customization. You are stuck with pre-set fill-in-the-blank templates that likely do not address your unique needs and circumstances. An attorney-drafted plan considers your family, assets, intentions, tax issues, and special situations to create customized documents tailored specifically for you.
Limited Scope
DIY tools only cover basic documents like simple wills, basic trusts, and basic powers of attorney. That is not enough for most people. An estate planning lawyer can draft a comprehensive set of documents addressing your entire financial life, legacy, healthcare, business interests, digital assets, beneficiary designations, asset protection, and other specialized needs through sophisticated planning.
Mistakes and Oversights
Without legal expertise, the odds of making mistakes on DIY documents like incorrectly structured trusts or powers of attorney containing errors are high. An attorney who specializes in estate planning is far less likely to overlook important provisions you need or make inadvertent drafting errors that could invalidate your documents. Avoiding even one costly mistake makes attorney guidance worthwhile.
No Legal Review
Even if you manage to correctly complete DIY forms, you still have not had an experienced estate planning lawyer review your plan for potential legal issues and sufficiency. Having an expert review your documents to ensure they are legally sound and meet your goals is crucial for protection. DIY plans lack this validation.
Complex Laws
Each state has its own complex laws and requirements governing the validity of estate planning documents. Rules differ significantly on issues like number of witnesses required, revocation process, trustees’ powers, and notices. An estate planning lawyer is thoroughly versed in your state’s laws and makes sure your plan complies fully so it remains intact. Generic DIY directions often do not measure up to each state’s estate laws.
Changing Circumstances
As time passes your needs, family situation, tax laws, and other circumstances change. DIY resources offer little or no support for updating your plan to keep pace. An estate planning lawyer provides ongoing counsel and maintenance to keep your plan current and prevent it from becoming obsolete, ineffective, or inconsistent with current laws.
Asset Protection
Sophisticated trusts and asset ownership strategies are often needed to protect your wealth from creditors, lawsuits, divorces, taxes, and other threats. DIY resources lack tools to properly shield your assets. An experienced estate planning lawyer has the expertise to build asset protection into your plan.
Tax Planning
Proper tax planning is a critical part of estate planning, yet it is a complex area that DIY resources are ill-equipped to handle. Failing to structure your estate in the most tax-efficient manner can result in your beneficiaries losing tens or even hundreds of thousands of dollars to unnecessary estate taxes.
An experienced estate planning attorney has the sophisticated skills and knowledge to arrange your plan to minimize estate taxes legally through strategies such as:
- Setting up trust structures like A-B credit shelter trusts to fully utilize estate tax exemptions for married couples. This can shelter up to $24 million from estate taxes in 2023.
- Establishing irrevocable life insurance trusts to keep life insurance death benefits out of your taxable estate.
- Using advanced gifting strategies over multiple years to reduce estate size below exemption limits.
- Employing charitable remainder trusts as a tax-wise way to leave money to heirs while also supporting charitable causes.
- Taking advantage of current law allowing portability and transfer of any unused estate tax exemption to a surviving spouse.
This level of sophisticated tax planning is simply not possible with one-size-fits-all DIY estate planning tools. Only an experienced attorney has the requisite skills to develop a customized plan that minimizes taxes on your estate in a lawful manner, potentially saving your family hundreds of thousands of dollars. This alone makes consultation invaluable.
Probate Avoidance
Going through probate to settle your estate can be time-consuming, public, and costly for your family. An estate planning lawyer uses tools like revocable living trusts, payable-on-death accounts, joint titling, and gifting to transfer your assets directly to heirs, bypassing probate. DIY resources rarely cover comprehensive probate avoidance at this level.
Peace of Mind
Ultimately, knowing your estate plan was prepared by a competent legal professional gives you confidence and peace of mind that your assets, family, and legacy are protected. DIY plans often leave lingering doubts and uncertainty. Proper planning brings certainty.
For most people, the minimal cost savings of DIY estate planning simply are not worth the legal validity risks, planning gaps, and lack of personalization involved. It is wise to consult an experienced estate planning attorney at Hammond Law Group in Colorado Springs to develop a customized plan addressing all your needs and ensuring protection for your family and assets. The value derived is well worth the investment.
