We urge those who may engage in DIY estate planning to evaluate the following considerations before making the leap and drafting your own estate planning documents:
The Role of the Attorney
An estate planning lawyer provides more than technical expertise in drafting complicated documents. Most have extensive experience in counseling clients in these most intimate decisions. For example, most have helped couples sift through the various possible options in selecting a guardian for the couple’s most-cherished “possession” — their minor children. That decision often seems simple, but the “ideal” guardian candidate may have a less than an ideal spouse, lack financial experience, or otherwise be unable or unwilling to serve. Spouses may disagree as to the choice of guardian. They may need advice to understand a guardian’s role. The attorney plays an important role in these and many other estate planning discussions.
The “Simple Plan”
Consider the elderly woman with a seemingly simple plan: she has two loving, adult children (one who lives with her) and two assets: a house worth $300,000 and a bank account worth the same. Her simple solution? She’ll keep both children happy by dividing things equally. So she drafts a Will and leaves the house to her son and the account to her daughter. She tucks the Will in her desk and lives happily ever after. Her children? They are not so happy. After her death, they realize Mom spent down her bank accounts to pay her bills so there is nothing left for the daughter. One can envision the son (who gets the house) telling the daughter he feels sorry for her, but Mom wanted him to have the house. The daughter, of course, concludes Mom’s intent was defeated. She sues the brother. With proper counseling and advice, that suit could have been avoided if Mom’s intentions were properly ascertained and expressed.
The Failure to Properly State Dispositions
A proper Will must clearly state the testamentary intent to dispose of assets. The language used must be dispositive in nature (a letter of instruction or words stating a person’s general preferences will not suffice). Those who draft their own Wills run the risk of using words, terms or descriptions that could fail to make effective dispositions. The failure to use words of “testamentary intention” could void the Will, just as the use of “precatory” language (i.e., “I would like”) could render the dispositions unenforceable.
Who Will Explain Your Intentions?
If a dispute arises, the court will often hear a swirl of allegations as to the decedent’s intentions from interested family members. Who will the court believe? Deciding the intention of the deceased may be among the most difficult tasks conferred upon any judge. Many may look for the voice of the person who died in a person who had conversations with him while he was alive about what he intended after his death, and does not benefit from the Will — that, more often than not, is an estate planning lawyer.
Will Your Document Survive Probate?
Different states have adopted rules as to the probate of Wills. Some are more complicated than others, but the person drafting a Will should know them. For example, New York law creates a presumption of validity of a Will if it was executed under the supervision of an attorney. New Jersey law imposes a presumption of “undue influence” if a Will benefits a person who stands in a close (“confidential”) relationship with the person who died. An independent attorney may be the most important witness in rebutting such a presumption (if not rebutted, the Will can be declared invalid).
Who Will Keep Your Will Safe?
Many states presume a Will was revoked if the person who died possessed the original Will and it cannot be located at death. Given that presumption, it often makes sense to leave the original Will in the possession of the estate planning lawyer who could document custody and control of it. With that type of evidence – even if the lawyer loses it – it may be possible to probate a copy of the Will as no presumption of revocation would apply. An individual may not be aware, much less follow these arcane rules that might preclude probate.
Federal taxes imposed on estates change often and have become increasingly complicated. Congress recently increased the federal estate tax exemption to $5.45 million through the end of 2016. Meanwhile many states, looking for revenue to plug budget gaps, have adopted their own estate tax structures with much lower exemptions (ranging from a few hundred thousand to as much as $5 million). Careful planning needs to be done to realize the potential tax savings that can be achieved through a detailed understanding of numerous options available to reduce estate taxes.
Coordinating Probate and Non-Probate Assets
A Will generally governs the disposition of assets held in the decedent’s name alone. Thus, one can draft a Will only to learn that it will have little impact if most of the assets are governed by beneficiary designations or other arrangements. Lawyers sometimes call assets governed by a Will “Probate Assets.” Assets that are governed by a contract, joint ownership, a beneficiary designation, or similar arrangement may be called “Non-Probate Assets” (these can include IRAs, 401ks, joint bank accounts, homes, other real estates, and insurance). For many Americans, most of their assets may fall into these categories (all of which may be included in their “taxable estate” for estate tax purposes). An experienced estate lawyer can guide the client through this process, helping to ensure that the client’s desired objectives comport with the structure of his assets.
Births, Deaths, Marriage, Divorce, and Incapacity
Each of these events may profoundly alter a person’s life. They also may alter the desired disposition of an estate. For example, in some states that have adopted variations of the Uniform Probate Code, divorce may automatically revoke dispositions to the former spouse. But who takes the former spouse’s share? That share might pass to minor children outright such that a court may have to appoint a guardian (possibly the former spouse) to hold and administer the assets. Or will the court hold those assets itself? The same types of considerations apply to all other changes in family relationships. A proper estate plan should address these contingencies.
Special Needs Planning
What if a child suffers from a learning disability, incapacity or is vulnerable to the influence of people seeking to grab his inheritance? What will happen to inherited funds if a child is disabled and requires governmental assistance such as Medicaid? For parents with special needs children or anyone who desires to leave assets to a child with special needs, specialized trust planning may be required to avoid risking a special needs child’s public benefits. In fact, one estate planning attorney noted that when he informed a LegalZoom representative that he had a disabled child, the representative advised him that he needed a supplemental needs trust which LegalZoom did not provide, and that he would need to contact an attorney to prepare one for him. It is doubtful that a non-attorney would be aware of the need for such specialized planning but that omission could be costly.
Same-Sex Couples and Other Relationships
Given the ever-changing legal framework governing same-sex couples and unmarried couples, it is important to have updated advice on the manner in which estate planning arrangements can be implemented. The same considerations apply to unmarried cohabitants, whose rights, if any, may be very limited without proper planning.
Post Death Planning
Proper estate planning may require prompt consideration of post-death planning options, such as the ability for an heir to “disclaim” property (have the property pass as though the heir died before the person who died). Those options require the advice of an experienced attorney, but more importantly, individuals who may need to invoke such options need to understand that they must act quickly and should not take custody or control of the assets if they hope to achieve a valid tax-qualified disclaimer under the tax law.
Preparing for Estate Administration
The estate planning attorney often represents the executors or trustees (if any) in the administration of the estate. This may create significant advantages since the estate planning attorney is familiar with the decedent’s assets, family issues, and other factors that may allow for a speedy administration of the estate.
Multi-State and International Issues
Significant differences in law can exist among the various states. Some estate planning requires consideration of international issues (approximately 20% of the U.S. population is first-generation or second-generation with at least one foreign-born parent). This may increase the risk that a Will prepared through a DIY provider will not properly account for laws that govern assets situated in another state or country.
Call us today to schedule your free estate planning consultation (813) 252-8667.