An estate plan is a great way to help get all of your assets in order, hash out your future financial goals, and better ensure your estate is distributed in line with your wishes. When put together wisely, it can also provide better protection from creditors and reduce your estate’s tax bill. After considering all of these benefits, you may decide now is the time to start putting together an estate plan.
And who cares more about your estate than you do? With this line of thinking, it may seem best to put together your own estate plan. Afterall, there are various free or really cheap online tools available to help you get the format for all the different legal tools you may want to use as a part of your estate plan. So why not? Unfortunately, this can lead to some very serious problems.
Problem #1: A do-it-yourself will costs more than a professionally drafted will
These sites often lure customers in with promises of a great deal. Sometimes that first step is a great deal, but it is often not enough. A simple will does little to protect your estate. Most estates need four documents for a proper estate plan: a will, a trust, power of attorney to handle healthcare decisions sometimes referred to as a living will, and a power of attorney for financial matters.
Problem #2: Sometimes a will is not enough
An estate planning professional will review your assets and help make sure they pass according to your wishes. Some assets, like bank and retirement accounts, pass through different legal tools called beneficiary designations. These are names that you likely listed when you started the account. You may need to change these designations to make sure they are handled the way you want, simply listing them within a will is generally not enough.
Some estates also benefit from a trust. This is the legal tool that can help to reduce the estate’s tax bill and protect assets from creditors, as noted above.
Problem #3: Stress for loved ones
One of the big benefits of an estate plan is the ability to take some stress off of the shoulders of our loved ones so they can focus on mourning and moving on with their lives after our passing. Using a fill-in-the-blank style estate plan can leave a complicated legal mess behind that our loved ones will need to negotiate without our assistance.