Should You “DIY” With Your Estate Planning

Most experts agree that there may be a few aspects of estate planning you can handle yourself, but for many aspects trying to do those would be very unwise.

So what may you be able to do yourself? The health care documents are readily available to the public, and with a thorough reading of them, you should be able to complete them yourself. The Durable Power of Attorney for Healthcare is the document in which you name someone to make your medical and personal decisions for you should you become unable to do that yourself. Be aware that this document is only effective, however, if you cannot make your own decisions. Your agent has no authority until that time. Another health care document which you can obtain is the Living Will. This documents states your intentions regarding withdrawal of life support if you become permanently unconscious or terminally ill and death is imminent. Many clients feel more comfortable reviewing these documents with their attorney prior to signing them, but in fact the forms themselves can be completed on your own.

What about a financial power of attorney? Although forms are readily accessible to the public, it is advisable to consult with an attorney prior to signing a power of attorney. A power of attorney can be a very powerful document and care should be taken in naming someone to have that power and in deciding the breadth of that power. Safeguards can be built into a power of attorney if you are concerned about giving someone power over all of your finances. You may choose to name more than one person or you may limit their authority to certain accounts or assets. You can also have a “springing” power of attorney, which states that the power of attorney is not effective until you are determined to be incapacitated (and you can decide how that determination is made).

There are also will forms available. I believe creating a will on your own is appropriate in only very limited circumstances. Before taking on that task yourself, you should ask yourself a few questions:

  1. How large is my estate?
  2. Who am I leaving it to? Are they minors or do that have issues like creditor problems or possible divorces that I need to plan around? Do any of the beneficiaries have special needs?
  3. Do I have a blended family?

A good estate plan is one that truly meets your needs and your goals, and when you “DIY” you may inadvertently become your own worst enemy and sabotage those goals. Although many of us like simplicity, short and simple may really not get you where you need to go. Do you know the signing requirements for a will? Do you know what happens to your will if you mark it up with changes?

It is also critical to understand what your will controls and what is outside of your will instructions. Any accounts or assets that you hold jointly with someone or on which you have named a beneficiary will not be controlled by your will. Also, if you choose to plan with beneficiary designations or joint ownership, do you really want those assets paid directly to that beneficiary upon your death?

Finally, remember that an expert can help you identify when changes in the law or changes within your own family make it necessary to update your estate planning documents. Think about what you owned and how old your children were the last time you signed a will? Has anything changed since then?

Although you may not want to spend the money to consult with an estate planning professional, if you make a mistake, there may not be a way to correct it. Then your heirs will probably pay more than you’d have paid a professional to help you in the first place.

So do you feel comfortable with a “DIY” plan?