There are estate planning downloads out there that are relatively affordable. You purchase a DIY will template, fill in the blanks, and you’re good to go. But is the process really as simple as that?
Let’s take a look at that question and the subject of DIY estate planning in general.
Choosing the Right Document
One of the problems with estate planning downloads is the simple fact that you may choose the wrong document. A lot of people assume that a simple will is the only thing you need, so they use a will without considering any other options.
In fact, there are many different types of trusts that can be utilized. Contrary to popular belief, you don’t have to be a multimillionaire to benefit from the use of a trust of some kind. Before we look at some of the possibilities, let’s examine the drawbacks of a simple will.
Estate Administration
A will is admitted to probate, which is a court supervised process. It will take about nine months at a minimum in most jurisdictions. No inheritances are distributed when the estate is stalled in probate, so the beneficiaries have to play a waiting game.
Expenses accumulate during probate. These would include court costs, legal fees, accounting expenses, appraisals, liquidation charges, and the executor’s remuneration. These expenditures reduce the value of the estate before it is distributed among the heirs.
Thirdly, probate is a public proceeding. Interested parties can access the records to see what transpired, so there is a loss of privacy.
No Spendthrift Protections
Beneficiaries receive direct lump sum distributions after the estate has been probated. There is no asset protection, and there is nothing stopping a beneficiary from spending their inheritance too quickly.
Plus, there is another consideration. Minor children cannot handle their own funds, so this will create a complicated situation if you leave an inheritance to a minor in a will.
Revocable Living Trust
To avoid all of the pitfalls above, you could use a revocable living trust. While you are living, you would be the trustee, so you would maintain control of the assets. After your death, the successor that you name in the document would administer the trust.
Probate is not a factor when a living trust is used, so that is one of the major benefits. After your passing, the trust becomes irrevocable. The beneficiaries would have no direct access to the principal, and this would be applicable to their creditors as well.
You do not have to direct the trustee to distribute the assets all at once. If you want to prolong the viability of the trust, you can allow for measured distributions over a prescribed period of time.
This is just one of the trusts that can be used when you’re planning your estate. People that go the DIY route may be overlooking possibilities that would be far better than a simple will.
Potential for Improper Execution
Specific laws must be followed to execute legally binding documents. This is why people use attorneys for important legal matters of all kinds. The same dynamic applies to the creation of an estate plan.
When you plan your estate, you are arranging for the transfer of all of your assets. This is a pretty big deal, and it is not something that should be done in an amateur way.
Take Action Today!
We can help if you’re ready to work with a lawyer to put a plan in place. You can call us at 860-548-1000 to schedule an appointment at our Westport or Glastonbury, CT estate planning offices.
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