Do-It-Yourself Risks

Do-It-Yourself Pitfalls

Everyone wants a bargain. The problem with shopping for a bargain when researching your estate planning options is being sure to compare items of similar quality.

Not all trusts and wills are of the same quality. Without getting advice from a qualified attorney, you may be missing out on opportunities to save your family thousands of dollars in legal fees and estate taxes after you pass away.

Qualified Attorney

While it is tempting to do it yourself or hire the cheapest online form provider, oftentimes it is discovered later that it would have been worth spending a bit more money up front to have the job done correctly.

A qualified attorney is not just a document preparation service but a trained professional who can evaluate your particular circumstances and advise you on ways to minimize estate taxes, avoid costly court proceedings, and ensure your children are cared for by the guardian of your choice rather than a guardian selected by a judge who doesn’t know you or your values.

LegalZoom

Online form providers like LegalZoom do not give legal advice. Quoting the disclaimer on LegalZoom's own website: "The information provided in this site is not legal advice, but general information on legal issues commonly encountered. LegalZoom is not a law firm and is not a substitute for an attorney or law firm. LegalZoom cannot provide legal advice and can only provide self-help services at your specific direction."

Using LegalZoom or other do-it-yourself kits can give you a false sense of security in that you believe the documents you create will cover your needs, but the mistakes are unlikely to be discovered until after you become incapacitated or pass away. Your family and loved ones are left behind to try to clean up the mess.

Rania Combs

An attorney practicing in Texas, has written a great article on the pitfalls of using LegalZoom which can be found by following this link:

http://www.texaswillsandtrustslaw.com/2010/05/24/legalzoom-vs-lawyer-what-you-dont-know-can-hurt-you/

Legal documents are not one-size-fits-all. Everyone's individual finances and family circumstances are different. Only an attorney is qualified to assess your individual life circumstances to give you proper legal advice.

Show your family that you care about them by having your estate planning documents drafted by a qualified attorney. Doing so will also show by example that it is ok to ask for help.

Things to Consider

Things to Consider When Planning...

Do all the parties get along?

Do you have a blended family?
Is there a need to protect the surviving spouse or the beneficiaries?

Do you want your child to act as successor trustee, or an independent third party?
Does one beneficiary have different needs than another beneficiary?

Do you have a special needs child? Be sure they don’t lose their government benefits after receiving an inheritance.
Do you have one child who could use the money more than another? Be sure to explain why in your estate planning so that the beneficiaries understand in the future.

Who do you currently give support to, or who would you anticipate giving support to in the future? Kids? Grandkids? Elderly Parent?
If something happened to you, who would raise your children? Where?

Even if you have a small estate, this is a major reason for completing a will.
If you name a sister and brother-in-law to act as guardian, what if your sister dies? What if they divorce?
If your successor trustee is the same person as your guardian – there are no checks and balances. In the alternative, does your successor trustee get along with your guardian?

Do you have any unfinished business to take care of?
Do you own a business? Who will take over in the interim or permanently?

Do you wish to make plans for your pets?
At what age do you want your beneficiaries to have unfettered control of their inheritances?

Don’t create trust-fund babies. You can implement rewards and incentives while still leaving flexibility for the unexpected.

Do you wish to disinherit anyone?
Who inherits if your named beneficiary predeceases you? Follow the blood line?
A case for following the blood line: you never know when your child might get divorced; the divorce rate is close to 50% these days. Some long-standing marriages are being tested by current economic situations. You may think of your son- or daughter-in-law as your own child. Plan for the possibility of divorce though. If you name an in-law as a direct beneficiary, and they get divorced, the money you gave them goes with the former in-law. Your son or daughter, and possibly your grandchildren, may end up losing out.
Do you wish to impose conditions on your beneficiary’s ability to inherit?

What if they are abusing finances, alcohol or drugs?
What is most important to you for your beneficiary to achieve?

Who gets your “stuff”? Quite often it is the little stuff of sentimental value that creates dissention among the beneficiaries instead of the money.
Do you need life insurance to cover estate taxes so that the beneficiaries don’t have to have a fire‑sale?

This is especially important when real-estate and farm land is involved.

What Can Go Wrong

Problems with Jointly Held Accounts

Any time you add another person’s name to your bank account, it becomes joint ownership. Many people do this with the thought of making the account accessible to someone in case of an incapacity. What they fail to realize though, is that if the person added is involved in a lawsuit, bankruptcy, creditor claim or divorce, any money in that jointly held account will be subject to those claims.

Payable on Death (POD) Accounts

Putting one child’s name on your bank account as Payable on Death expecting that he will “do the right thing” and distribute any money left equally among himself and his siblings:

There are 2 problems with the above:

He has no legal obligation to do so.
If, in the mean time, he were to be involved in a lawsuit, bankruptcy, creditor claim or divorce, all that money may be considered his, and not the other siblings.

Having No Estate Plan

Having no estate plan at all will lead to the following:

Family members fighting over who will raise your kids. Ultimately, a court will decide and very likely it will not be who you would have wanted raising your children.
Your estate will be distributed according to the laws of intestacy. This could be devastating to your surviving spouse should you have children from a previous relationship.
You end up sending an unintended message to your loved ones: that you didn’t care enough about them to take time to make a plan.
Money goes outright to your children. If they are minors, their guardian (someone you don’t know) will be making financial decisions for them.

Kids get unfettered control of their inheritance at age 18. What if they are not responsible enough at 18 to make good financial decisions? What would you have done with the money at age 18?!

Dear Dad,

Mom and I are finally getting over the shock of your death resulting from a head on collision with a drunk driver who had no insurance. Mom said she had tried to convince you to create a will, but that you felt you were too young – you were after all, only 39 years old. There were a few things you didn’t get around to discussing with mom and I while you were still here with us. Imagine our surprise when we found out that you had a child out of wedlock when you were 17. I have an older half-sister I was never aware of – mom said she always had her suspicions. Because you didn’t create a will or a trust, your estate now must be probated and will be subject to the laws of intestacy. A big word but essentially it means that since everything you and mom had was community property, mom gets nothing and I share half your estate with a sister I never knew. I, of course, can help mom, but your daughter is a little upset you weren’t involved in her life. She’s thinking about having her mom sue your estate for back child-support payments.

Incomplete Planning

My mom died very unexpectedly at the young age of 50. While she did have a will leaving everything to my father, I don’t think she gave consideration to how that might affect her children in the future.

We were a very close-knit family while mom was still alive so it was a bit of a shock when my dad started dating a woman within one month of my mom’s passing – he married this woman 4 months later. I don’t blame my father for wanting to find a companion – after all, he and my mom were a very loving couple, best friends even and losing her left a large void.

The problem came when after some time had passed, us children wanted to have a few of our mom’s personal items. In particular, I wished to have one of her cake plates. You would think that something so simple wouldn’t be a problem, but my father made me ask his new wife’s permission to take the plate. I can’t begin to tell you how hurt that made me feel. It was my mom’s plate, not his new wife’s plate.

I know very well that had my mother still been alive, she would have just given the plate to me…probably without even mentioning it to my dad as he wouldn’t have minded at all.

Quite often it is the little things, the personal possessions which have sentimental value, which cause so many persons to argue after the death of a loved one. With a little planning and foresight, this situation would have never taken place.

Who gets your “stuff”? Remember when dividing personal effects equally – a grandfather clock can’t be split 3 ways. Equal means equal in value. Be sure to be very clear in spelling out who gets what, or if you want to leave the decision to the beneficiaries, give them detailed instructions on how to go about dividing everything (for instance drawing straws or flipping a coin.)

Call to schedule your consultation with an attorney who listens and cares.

(623) 518-3513

2980 N. Litchfield Rd, Suite 120
Goodyear, AZ 85395

Email: [email protected]