You turned an old dresser into a bookshelf with some sandpaper and chalk paint. You made planters out of plastic soda bottles. You made art out of reclaimed wood. You tiled the backsplash in your kitchen. You remodeled your bathroom. You do your own taxes. You are a do-it-yourselfer.
DIY is not just an acronym. It is a way of life, providing benefits from tangible monetary savings to a sense of accomplishment. After all, you do appreciate things a little more when you used your own mind and hands to create them. Do these benefits extend to estate planning?
"Everyone should have an estate plan" is a warning often given, because there are consequences to not having one. This includes the possibility that your assets could go to unintended beneficiaries, the court could grant guardianship of your children to someone you do not trust or a hospital could follow a course of treatment you would never have wanted.
Okay. So you know that you need one. You know that templates for wills, powers of attorney, health care directives and other documents are available online. Your DIY lifestyle has been successful up to this point; is it really such a bad idea to fill in the blanks and do it yourself?
The answer is a resounding yes. You should never create a DIY estate plan. Here are just five of many reasons why you should not delve into DIY estate planning:
- The cost is "penny wise but pound foolish." Templates available online cost less than consulting a lawyer. You will save a few dollars now, but an experienced lawyer can help you protect your assets and plan to avoid significant costs in the future.
- Templates are not flexible. On a DIY form, all you do is fill in the blanks. You can insert the name of a person here or include a list of assets there, but you cannot change the terms. You cannot be creative in your plan, like putting certain restrictions on money for beneficiary who may not manage his or her money well or you want to encourage getting a higher education.
- A plan with errors is like having no plan at all. When you do not have a will, the court distributes your assets based on a particular formula or rules of intestacy. When you do not have a guardianship designation, the court can make one for you. When a court finds that there are errors in your will or other document, the same rules apply.
- Templates rarely consider state specifics. Estate laws are highly nuanced from one state to another, and templates are rarely state specific. Does your state have estate taxes? Some do; some don't. Do you own property in another state? There could be different requirements for property transfers. Have you moved? A will executed in one state may not be considered valid in another.
- You can't choose who gets the leftovers. You constantly earn new types of income, buy new things or take on new debt. It is impractical to update a plan every time your estate experiences a minor change. This is why lawyers include something called a residuary clause. It covers how any money or assets left after gifts are made and liabilities are paid. Templates do not always include this type of clause or it is insufficient under state law.
When an issue arises related to your estate plan, and it often does in DIY cases, it can cost a significant amount of time and money for your heirs and beneficiaries to fix the problem. In some cases, it may be too late to do anything about it. Maybe the better warning is that, "everyone should consult an attorney about an estate plan."