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The Dangers of “Do It Yourself “Estate Planning. While it may be tempting to save some money and plan your estate by yourself, it is likely not a good idea. Estate Planning is full of small details and various documents that the average person just doesn’t know about, but which someone trained in estate planning will. For this reason, it makes sense to get professional help from an estate planning lawyer for all your estate planning needs — otherwise, mistakes are likely. While everyone can benefit from estate planning, DIY estate planning is an especially bad idea if the estate in question is going to be worth more than the estate tax exemption, which sat at $12.92 million for 2023. However, this amount is set to revert to the pre-2018 level of $5 million, adjusted for inflation, in 2026 when the Tax Cuts and Jobs Act expires. It is also a bad idea if you do not understand what types of assets you own and how they should be distributed among your heirs to avoid possible taxation nightmares.
Dangers of DIY Estate Planning: Moving Pieces
The first thing to know about estate planning is that there isn’t actually a single document known as an “estate plan.” Rather, an estate plan is an idea of what you want to happen to your money and other assets after you die, and it is made up of a collection of documents that create the legal situation needed for those wishes to happen. Therefore, there is really not a cookie cutter solution or one size fits all option, rather an estate plan is very unique to your situation, wants, and needs.
Many of these documents take a bit of know-how to get right. They often vary based on the state you’re living in, and getting the details right is important. If you don’t know what you’re doing, there stands a good chance you’ll mess something up and leave a lot of issues for your family to clean up after you are gone.
Dangers of DIY Estate Planning: Wills
A will is a legal directive that spells out what you would like done with your estate after you pass away. There are lots of apps and websites that will guide you through the process of creating a will. In the state of Florida, if you have a will, you still have to go through probate
If your estate increases in size, the value of your assets increase and the number of people and contingencies increase as well, it might become a bit more complex, requiring legal terminology to accomplish your goals. This is especially true if you have minor children whom you wish to provide for.
Wills need updating. If you have kids, get married or divorced, or come into a large sum of money or valuable asset, you’ll need to adjust your will to account for the change.
Lastly, the likelihood of a will being contested and possibly changed in a probate court is much higher if it was a DIY will and did not contain the proper legal verbiage needed to make sure there is no room for further judgement. Wills created by a lawyer with the proper language, signed by a notary, and witnessed by two witnesses stand to have more validity than DIY wills in court.
Dangers of DIY Estate Planning: Trusts
A trust is a legal document that passes assets to a beneficiary. Unlike a will, trusts can have conditions attached to the bequest, such as disbursing the funds over time or after the beneficiary reaches a certain age. Trusts can be revocable, which means you can change your mind, or irrevocable, which means you can’t.
There are tax advantages to irrevocable trusts for estates over a certain size. Trusts also have the advantage of not being subject to probate court. While perfectly legal and sound, trusts can be done DIY but the many options, however, means you really need to do some serious homework before you proceed.
For most people, that homework is going to prove too time-intensive and detail-oriented to do correctly, which can have big consequences in the long run. Once again, the best course of action is to get help from a professional to make trusts and place the correct assets in them. A professional will know which types of assets should go into a trust and which to leave out.
At the end of the day, an estate plan is about making sure that your wishes are followed and your family is taken care of once you’ve died.
While it may be tempting to save some money and do this yourself, making an estate plan is not easy — it requires numerous legal documents, including wills and trusts, and the possibility for mistakes is serious. Finding someone to help you, like an estate planning lawyer, is the best option.
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