Do a Google search for “online estate
planning documents,” and you’ll find dozens of different websites. These sites
let you complete and print out just about any kind of planning document you can
think of—wills, trusts, healthcare directives, and/or power of attorneys—in
just a matter of minutes. And the documents are typically quite inexpensive.
At first glance, such DIY planning documents might appear to be a quick and cheap
way to finally cross estate planning off your bucket list. These forms may not
be perfect, many consumers reason, but at least they’re better than having no
plan at all.
However, relying on DIY planning documents can actually be worse than having no plan at all—and here’s why:
An inconvenient truth
Creating a plan using online documents, can give you a false sense of
security—you think you’ve got planning covered, when you most probably do not. Relying
on DIY planning documents is one of the most dangerous choices you can make. In
the end, such generic forms could end up costing your family even more money
and heartache than if you’d never gotten around to doing any planning at all.
At least with no plan at all, planning would likely remain at the front of your
mind, where it rightfully belongs until it’s handled properly.
Planning to fail
Many people don’t realize that estate planning entails much more than just
filling out template driven legal forms. These websites offer a
one-size-fits-all solution to your unique situation, needs, and goals. Even worse,
they provide no real guidance or counsel, which leads to a plan that misses the
mark often—and the loved ones you were trying to protect will be the very ones
forced to clean up the mess.
The whole purpose of estate planning is to keep your family out of court and
out of conflict in the event of your death or incapacity. Yet, as cheap online
estate planning services become more and more popular, millions of people are
learning that taking the DIY route can not only fail to achieve this purpose,
it can make the court cases and family conflicts far worse and more costly.
One size does not fit all
Online planning documents may appear to save you time and money, but keep in
mind, just because you created “legal” documents doesn’t mean they will actually
work when you need them. Indeed, if you read the fine print of most DIY
planning websites, you’ll find numerous disclaimers pointing out that their
documents are “no substitute” for the advice of a lawyer.
Some disclaimers warn that these documents are not even guaranteed to be
“correct, complete, or up to date.” These facts should be a huge red flag, but
it’s just one part of the problem.
Even if the forms are 100% correct and up-to-date, there are still many
potential pitfalls which can cause the documents to not work as intended—or
fail all together. And without an attorney to advise you, you won’t have any
idea of what you should watch out for.
Estate planning is not a one-size-fits-all kind of deal. Even if you think your
particular situation is simple, that turns out to almost never be the case. To
demonstrate just how complicated the planning process can be, here are 4 common
complications you’re likely to encounter with DIY plans.
1. Improper execution
To be considered legally valid, some planning documents must be executed
(i.e. signed and witnessed or notarized) following very strict legal
procedures. For example, California requires that you and every witness to your
will must sign it in the presence of one another. If your DIY will doesn’t
mention that (or you don’t read the fine print) and you fail to follow this
procedure, the document can be worthless.
2. Not adhering to state law
State laws are also very specific about who can serve in certain roles like
trustee, executor, financial power of attorney, and witnesses. Having an
invalid person serving in an important role can cause your entire plan to fail.
3. Unforeseen conflict
Family dynamics are—to put it lightly—complex. This is particularly true for
blended families, where spouses have children from previous relationships. A
DIY service cannot help you consider all the potential areas where conflict
might arise among your family members and help you plan to avoid it. When done
right, the estate planning process is a huge opportunity to build new
connections within your family.
4. Thinking a will is enough
Lots of people believe that creating a will is enough to handle all their
planning needs. But this is rarely the case. A will, for example, does nothing
in the event of your incapacity, for which you would also need a healthcare
directive and/or a living will, plus a durable financial power of attorney.
Furthermore, because a will requires probate, it does nothing to keep your
loved ones out of court upon your death. And if you have minor children,
relying on a will alone could leave your kids vulnerable to being taken out of
your home and into the care of strangers.
Don’t do it yourself
Given all these potential dangers, DIY estate plans
are a disaster waiting to happen. And as we’ll see next week, perhaps the worst
consequence of trying to handle estate planning on your own is the potentially
tragic impact it can have on the people you love most of all—your children.
Dedicated to empowering your family, building your wealth and defining your legacy,
