Updated: Apr 5
A quick Google search for “digital wills” or “online estate planning” will return a multitude of different websites offering low-cost, do-it-yourself (DIY) and sometimes even free estate planning documents, such as wills, trusts, powers of attorney, and healthcare directives.
From LegalZoom® and Rocket Lawyer® to TrustandWill.com and FreeWill.com, these DIY legal documents may seem like a cheap and easy way to finally cross estate planning off your to-do list—and do so without having to pay a lawyer big bucks to assist you. After all, you have been able to prepare and file your taxes online for years, is estate planning really that much different? Besides lawyers are using the very same forms you find on these DIY document websites, right?
An Inconvenient Truth This kind of thinking is exactly what DIY and online estate planning services would like you to believe, but it is far from true. In fact, relying on DIY or online estate planning documents can be one of the costliest mistakes you can make for your loved ones.
Keep in mind, just because you created “legal” estate planning documents that do not mean that they will actually work when you—or most importantly, the people you love—need them. Without a thorough understanding of your family dynamics, the nature of your assets, and how the legal process works upon your death or incapacity, you are likely to make serious mistakes when creating a DIY or online estate plan. These mistakes may be discovered when it is too late—and the loved ones you were trying to protect get stuck in a costly and traumatic court process that can drag out for months or even years.
In the end, relying on DIY or online estate planning documents can actually be worse than having no estate plan at all—and here is why:
A False Sense of Security Creating your estate plan using online document services can give you a false sense of security. You prepare the documents thinking that you have all of your estate planning basis covered not realizing that it could be missing key pieces. Completing a DIY plan may even lead you to believe that you no longer need to worry about estate planning, causing you to put off making important updates as the laws and your life change.
Planning To Fail The primary purpose of estate planning is to keep your family out of court and out of the conflict in the event of your death or incapacity. Yet, as cheap online document services become more and more popular, millions of people are learning—or will soon learn—that taking the DIY route can not only fail to achieve this purpose, it can make things even more complex and costly for the people you love.
Most people assume that estate planning is all about filling out the right legal documents. Yet, the true value of estate planning is not about the documents themselves—it is the planning aspect that is most important. Documents are the byproducts of the plan and the outcome of counseling and decisions that require thought, consideration, and a true understanding of all the options and their potential consequences.
Without proper planning and consideration, the documents themselves—wills, trusts, health care directives, and powers of attorney—are not worth the paper they are printed on.
Having a trusted advisor who can help you to anticipate all of the potential problem areas and conflicts—as well as potential opportunities—is an invaluable tool that is not available in most DIY platforms.
When done right, the value of this kind of estate planning is truly priceless because it results in the right plan for your family at the right budget for you, and it leaves your loved ones with more than just a set of documents, but with a trusted advisor who will be there for them when you cannot be. This is exactly what we at Reflections Life Planning LLC provide every client we serve through our Life & Legacy Planning Process.
In a future article, we will go into detail about how our planning services work. First let’s look at how to DIY planning can go wrong by looking at five of the most common failures you are likely to encounter when using online DIY estate planning documents, instead of working with a lawyer.
One Size Does Not Fit All “In preparing for battle, I have always found that plans are useless, but PLANNING is indispensable.” -Dwight D. Eisenhower, Former U.S. President and Commander of Allied Forces during WWII
A typical set of documents that you get from an online DIY estate planning service (and even many estate plans created by some lawyers) will usually include three to five basic legal documents: a will, a financial power of attorney, a healthcare directive, possibly a trust, and a legal guardian nomination if you have minor children. These are pretty standard documents for most estate plans.
The thing about most standard documents is that they simply cannot address the real-life complexities of your family dynamics, your assets, and the ever-changing circumstances of your life. Contrary to what the DIY services would like you to believe, estate planning is not a one-size-fits-all, once-and-done kind of deal. Even if you think your particular assets and family situation are simple, that turns out to almost never be the case, and you are likely to face one of the following issues that can leave your loved ones at risk.
5 Ways Your DIY Estate Plan Can Fail
Number 1 Way Your DIY Estate Plan Can Fail: Thinking A Will Is Enough One of the ironic things about estate planning is that the one legal document everyone thinks they need most is the one legal document that actually accomplishes the least. Yes, you know you need a will, but a will alone does not do much until you are already deceased.
A will can ensure the people you choose are the ones who handle your affairs and who ensure your assets go where you want them to go in the event of your death. However, a will does not keep your family out of court. In fact, relying on a will alone ensures your family and friends will have to go to through probate court when you pass away. Also, a will does not address issues that will arise if you become incapacitated or have minor children who need care.
Number 2 Way Your DIY Estate Plan Can Fail: Improper Execution The best documents in the world are no good if you fail to sign them or sign them improperly. It may seem arbitrary, but it is true. We have seen family after family who brought us an estate plan after the death or incapacity of a loved one that we were not able to support them and act upon because the documents were either not signed, or were signed improperly.
This happened to me when I was first getting started in the estate planning practice. I traveled home to be sure that my parent’s documents were in order and realized that my mother had forgotten to sign her will in front of a notary. Had she passed away without properly executing her will, it would have been as if she never had a will.
To be considered legally valid, certain estate planning documents like wills must be executed (i.e. signed, witnessed, and/or notarized) following very strict legal procedures. For example, many states require that you and every witness to your will sign it in the presence of one another. If your DIY will do not mention that condition (or you skip over the fine print) and fail to follow this procedure, the document can end up invalid when your family needs it most.
If you have created or started a DIY estate plan and wish to have it reviewed, contact us to see how you can get a Family Wealth Planning Session™ at no cost to you.
Next week in part two of this series, we will cover the remaining three ways your DIY estate plan can fail and leave your family at risk.
This article is a service of Reflections Life Planning LLC. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.