Perhaps it was the pandemic, or maybe it was some other reminder that pushed you to finally plan your estate. In any case, you’ve decided you no longer want to be among the two-thirds of Americans who have no will or trust.
Now, you’re faced with a big question: Should you do DIY estate planning, or should you hire a lawyer to plan your estate?
How you answer this question will depend on a large number of factors and details unique to your family and financial situations. But you can identify the best course of action by understanding the do-it-yourself estate planning process and comparing it to the process when you involve an estate planning lawyer.
This article provides exactly that information. Read on to learn the differences between done-for-you and do-it-yourself estate planning.
DIY Estate Planning Without a Lawyer: 13 Steps
Estate planning is a tricky task. If you hope to avoid probate problems and disputes among your beneficiaries, you have to be extremely detailed and precise in your plans. While this process looks slightly different for every individual and family, these are the basic steps to DIY estate planning.
1. Create a List of Your Physical Assets
Before you create your estate planning documents and assign assets to beneficiaries, you have to understand what you actually have. That means you need to create a list of your physical assets.
Your home and vehicles may come to mind immediately, but you will need to go into more depth than that. With pen and paper in hand, walk around the outside and inside of your home and write down every physical item of value. Examples include jewelry, computers, televisions, art, collectible items, and expensive tools and equipment.
2. Calculate Your Intangible Assets
With your tangible assets itemized and recorded, you’re ready to inventory your intangible assets. These are the items of value that you own but cannot touch — think bank accounts, insurance policies, investment accounts, stocks, bonds, cryptocurrencies or other digital assets, and similar items.
3. Tally Your Debts
When you pass away, your debts will factor heavily into what your minor children, adult children, and other loved ones receive from your estate, so it’s important to have a clear picture of your debt situation as you plan your estate. Factor in mortgages, auto loans, credit card debt, home equity lines of credit, and any other sources of debt.
4. Round Up Your Retirement Accounts
You have likely accumulated a few retirement accounts, such as a Roth IRA and 401(k), over the course of your career and life. Each of these may have designations that point them to particular family members. These beneficiary designations can conflict with the beneficiaries you name in your estate plan, creating exactly the kind of confusion that can lead to disputes among your heirs.
So, gather all of your retirement accounts and review the assigned beneficiaries. Make sure these recipients are still the recipients you would choose, and make adjustments if that is not the case.
5. Pick an Administrator for Your Estate
Often called an executor, the estate administrator you choose will be responsible for ensuring that the wishes laid out in your will are carried out upon your passing. You need to trust not only this person’s trustworthiness, but their mental state and expected emotional state after your death.
6. Assign Guardianship
If you have minor children, you will need to account for their guardianship in your estate plan. Even if your children are now adults, you may still need to consider guardianship for family pets.
7. Draft a Will and Think About a Trust
Of all of the legal documents involved in estate planning, your will is the most impactful. That’s because this document defines who inherits your property and who will become the guardian of your minor children or pets.
This is also an important point at which to consider a living trust. A trust assigns property to a trustee, who holds legal title to the property for a beneficiary. Trusts can be handy tools to keep property from going through probate court and reduce the amount beneficiaries pay in estate taxes.
8. Inspect Your Insurance Policies
If you have life insurance policies or annuities, now is a great time to make sure they correctly list your beneficiaries and are otherwise up to date.
9. Create a Durable Power of Attorney
A durable financial power of attorney is a legal document that assigns someone to handle your finances in the event that you become incapacitated. This is a key part of any estate plan because it prevents a judge from having to pick someone for you and ensures that your assets and interests are managed responsibly.
10. Build Your Living Will
Also called an advance directive, a living will expresses your wishes for your end-of-life healthcare. These documents can be critically important in the event that you become unable to communicate.
11. Choose a Healthcare Proxy
While a living will lays out your end-of-life care wishes in writing, a healthcare proxy assigns the responsibility of making medical decisions on your behalf to another person. Both are key parts of a comprehensive DIY estate plan.
12. Make Copies
With your estate planning documents completed, you need to make multiple copies and put them in different places. While the original documents are the ones used in any court or legal proceedings, copies can save you time in the event that something happens to an original.
13. Schedule Regular Reviews
Estate planning focuses on the end of your life, but much can change between now and your passing. That’s why you need to review your estate plan at regular intervals. At each review, make sure every piece of information is still accurate.
Problems with the DIY Approach
If those DIY estate planning steps sound like a lot of work, that’s because they are a lot of work. And make no mistake — errors in these steps can wreck your wishes and cause plenty of headaches. But that is not the only problem you may encounter with the DIY approach.
For example, Texas law defines how each document in your estate plan must be presented and signed. A mistake here could render a part of your plan unenforceable.
Meanwhile, you face the problem of forgetting some of your assets. Over the course of a career, it’s not unusual to have more than one employer-provided 401(k), for example. And if you forget to list an asset like that in your will or place it in a trust, where it ends up may not be where you would have wanted it to go.
Another difficult obstacle you are likely to encounter if you go the DIY route is with the estate planning documents themselves. Many of the premade documents you find online will be far too simple to account for all of the details of your estate. That means some of your assets may be left out or handled improperly.
Finally, you have the matters of time and peace of mind. Finding the time to not only create your estate plan but review it regularly is bound to be a challenge. Then, you’re left to worry: Did you leave something out? Did you make a mistake that will cause your loved ones to suffer financially after your death? Without legal expertise, you’re unlikely to know the answers to these questions.
The DIY Alternative: Estate Planning with a Lawyer
There are plenty of problems with DIY estate planning, so what’s the alternative? Working with an experienced estate planning lawyer. Your attorney will handle all of the steps described above, guiding you through the portions that you have to complete on your own.
At the basic level, the done-for-you approach reduces the amount of work you have to do, but that’s not the only benefit a lawyer provides over making your own estate plan:
- A consultative approach to legal advice. A lawyer isn’t just there to provide technical knowledge. An experienced estate attorney can act as a guide as you make difficult decisions about your estate, walking you through each option and listening to your needs.
- Providing clarity during disputes. Should a dispute between your heirs arise after your passing, your lawyer can provide clarity about your wishes to help settle the matter.
- Spotting potential problems. The best estate lawyers become experts at identifying and solving estate problems before they ever happen.
- Handling complexities. Even a small quirk in your financial situation can lead to enormous difficulty if you plan your own estate. A qualified lawyer can simplify the complexities and properly handle every detail.
DIY or Estate Planning Attorney: How to Decide
What DIY estate planning saves you in legal costs may not amount to true savings when you compare it to the legal headaches and risk you assume by not working with a lawyer. Ultimately, the decision is yours, but keep in mind that what you decide doesn’t just affect you. It also affects your loved ones. Ask yourself: Am I 100 percent certain that I can plan my estate on my own and make no mistakes? Am I OK with the prospect of a mistake leading to my beneficiaries missing out on or mishandling valuable real estate and other assets? If the answer to questions like these is no, contacting an estate attorney should be on your to-do list.