The coronavirus COVID-19 pandemic has increased people's awareness of the need for estate planning. Panicked to get an estate plan in place while directed to stay at home, many Americans are turning to online do-it-yourself estate planning tools. However, it is critical to understand the many dangers of DIY estate plans. Instead, individuals should work with experienced estate planning professionals to get a comprehensive, valid plan while staying safe and practicing social distancing guidelines.
As the devastating impact of the novel coronavirus pandemic is being felt across the nation, many Americans are scrambling to set up estate plans. In this time of uncertainty, it is smart for individuals, especially the elderly and those with underlying health conditions, to ensure that they and their loved ones are protected if anything should happen, but the impending sense of doom is leading many people to fail to exercise caution. Instead of reaching out to a qualified estate planning professional, many Americans are turning to DIY options on the internet. However, DIY estate plans often do more harm than good and should be avoided.
1. DIY estate planning is not tailored to your needs
Most DIY estate planning tools provide users with a standard form of fill-in-the-blanks where individuals can enter their personal information. Their goal is to provide one tool that works for as many people as possible. However, this one-size-fits-all-approach does not take into account each person's unique financial situation, family relationships, long-term goals, tax consequences and other concerns. Only through working with an estate planning professional can you prepare a comprehensive plan that is unique and tailored to your specific needs.
2. DIY estate plans may be invalid
Every state has its own requirements that must be followed for estate planning documents to be valid. Wills, trusts, health care powers of attorney, financial powers of attorney and advance medical directives all have their own requirements. For example, with wills, each state has different rules on the number of witnesses needed, who can serve as a witness, how and where the witnesses need to sign, whether handwritten wills are allowed and whether the documents need to be notarized. One little mistake in the execution can invalidate the entire document.
Errors in execution are especially easy to make while people are practicing social distancing. For instance, sending your will to a friend to sign as a witness could invalidate your will if your state requires that witnesses sign in the presence of the testator.
3. DIY plans may be inaccurate
Most DIY estate planning tools have you fill out an online questionnaire. There is always the risk that you may misunderstand the question, give an incomplete answer or skip a relevant topic that you mistakenly believe does not pertain to you. If the document that you create is vague, confusing or contradictory, it could result in your family being tied up in a costly court battle for years after your death. Certain mistakes could even end up invalidating the entire document. With professional looking over the documents, you can be confident that you have an estate plan that accurately reflects your wishes.
4. DIY estate planning is not comprehensive
When most people think of estate planning, the first thing that comes to mind is a will. However, a will is often not sufficient to meet your estate planning needs. If you are not a legal professional with estate planning expertise, you are unlikely to know what other tools may be necessary, such as a living will, health care power of attorney, financial power of attorney or specialty trust.
For example, the novel coronavirus has had an extreme impact on the U.S. economy, and an estate planning professional will know how to take advantage of the current environment where interest rates are low and asset values are depressed. Depending on your specific circumstances, it may make sense to consider different trust options, such as a grantor retained annuity trust, charitable lead annuity trust, spousal lifetime access trust, or swapping assets with a grantor trust. Now might also be a smart time to gift property at its current low values or complete intra-family loans.
It is possible to work with experienced estate planning professionals without violating social distancing guidelines and stay-at-home orders. It is not true that your only option is online DIY tools. Meetings with professionals can be completed over the phone or through video conferencing, and documents can be sent through email, fax or the regular mail. With today's technology, it is not difficult to stay safe and complete a valid estate plan that is comprehensive and tailored to your needs.
Depending on your state laws, certain documents require the signature of witnesses or notaries. In general, remote online notarization is usually not available for estate planning documents, like wills and trusts. Some states allowing or planning to soon allow remote notarization of various documents include Arizona, Georgia, Illinois, Iowa, Florida, Idaho, Kentucky, Maryland, Michigan, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Virginia, Washington and Wisconsin. Every day the situation may change, and an estate planning professional can keep you updated on the current laws.
In addition, many banks and post offices offer notary services and are still open as businesses providing essential services. Finally, there may be mobile notaries who can come to you and complete documents while maintaining social distancing.