As the immediate economic impact of the pandemic begins to lift, it is understandable that many consumers, especially millennials, became interested in DIY estate planning during the pandemic to save on costs. Unfortunately, not all that comes cheaper is worth the price you pay—whether now or later. As you build your wishes for your estate plan, it is important to avoid these potential pitfalls while DIY planning. If you feel that DIY estate planning is still the best fit for you, please review the top estate planning mistakes so you can avoid a disaster. Once you are finished with your plan, we will even review it for free and let you know what may be missing or be problematic. Our best advice is to not go it alone, even if you use a software-based program. That said, if you are intent on doing so, here are the top planning mistakes to be aware of.
1. DIY pitfalls. Many DIY estate plans are not led by real attorneys, but by software-based programs that may or may not be up to date with the latest laws. Further, most DIY companies charge extra for simple planning questions that are generally included in a regular attorney-client based meeting.
2. Mindset of being too young for a plan. Often, people feel they may be too young to have an estate plan. As the pandemic has proven, illness and incapacity can strike at any time and at any age. It is important for everyone over the age of 18 to at least have an advanced medical directive established while you are healthy and of sound mind. This way your wishes are detailed regarding your care preferences. You can also set up documents to protect any pets you may have that might need care in the event you become incapacitated.
3. Myth of not “owning” enough. Even if you have nothing to leave behind to an heir (or if you have no heirs at all) it is important to document your wishes for care, should an emergency happen. There is no magical number of assets, cash or real estate, that qualifies someone to have an estate plan. Estate plans are for all walks of life and budgets. Creating a trust is not just for the wealthy either. A trust can be affordably created to protect any assets from probate. You do not need to have a certain amount of money to benefit from having a trust and, likewise, you do not need spend a lot to create one.
4. Lack of understanding legal terms. It is okay to admit if you do not understand what estate planning is or what your previous or current plan entails. We are here to help demystify the process and explain every word, every step, in-depth with you. Some law firms and DIY companies have a complicated and antiquated process of creating an estate plan—but not Wiles Law. What makes us different is that we find strategic ways to protect your estate through new planning structures, staying on top of changing estate laws, and sourcing and innovating new systems. Our planning happens in three easy steps— Design, Sign, Align—so you can spend more time on other parts of your life that matter more.
5. Important life events. Pandemic living has created endless to do lists and lack of free time — making it easy to forget to update important documents after a birth, adoption, death, marriage, divorce or move. We understand you need to catch your breath after a difficult year of rebuilding. When you are ready to make important updates to your plan, we can help you quickly and easily. In a perfect world it would be best to make updates immediately or within a few months of an event happening. We understand that may not be possible for some, so our best advice is to not wait longer than six months as laws may change that impact your estate.
6. Not building in a plan for long term care or disability. We all forget to think about long term care. It is not something we want to plan for, but it is something to consider. Most of us hope we will live long into old age gracefully, but the chances of disability or long-term care is more likely than you may think. By the time you reach 65 years old, there is a 70% chance you will need long term care insurance. Women are more likely to need care longer than men by an average of 7 years. Do you have this built into your estate plan with coverage and funding?
7. Incorrect titles and funding. This is one of the most common mistakes we see. If you have a trust, you want to make sure your assets are titled in the name of the trust, not necessarily your legal name. This way the asset is protected from probate by the trust, not you. Once the asset is properly titled, you will also want to include plans for funding. Your estate plan does not work unless you set up instructions on where the funds will be coming from and how they will be distributed.
8. Not planning for minors and guardians. If you pass away while your children are minors, the court will appoint a guardian who will control their legal inheritance until the children are 18 years old. But, if you elect to create a revocable trust for your children, you can protect them from lengthy court proceedings and allow the guardian to take immediate care of them with your provided inheritance. This can also protect them from irresponsible spending habits and creditors by using specific terms established by you.
9. Forgetting where your estate plan is. Many times we hear from beneficiaries or personal representatives asking if we have information regarding where your plan is located. Ideally, you should give a copy to your personal representative BEFORE you become incapacitated or pass away so there can be an honest conversation about the plan, instructions, and a chance to ask any questions. We also keep a copy on file at our offices as well. While you review your plan with your personal representative, it is important to discuss any details for minors, guardians, or pets who also need to be taken care of through the estate.
10. Not formalizing the plan, legally, with an attorney. Work-in-progress plans or handwritten notes are better than no plan at all, but unfortunately, they will not hold up in a court of law. Once you have come to an agreement on how you would like to protect your estate, it is important to bring those plans, ideas, and questions to an attorney to formalize and make a valid estate plan. As a part of our services, we encourage clients to write their own “Legacy Letter,” which details specific information on how you would like your legacy honored and continued to your heirs.