A number of do-it-yourself options—including books, software and websites—allow you to generate a will or other estate planning documents for a fraction of the cost of hiring an attorney to prepare your will. While the upfront savings are enticing, there is no shortage of “horror stories” involving DIY wills and the resulting long-term emotional and financial costs.
As an experiment, I decided to use one of the web-based products to create my own will. I was able to prepare a document for only $5.00. Overall, the process was simple and user-friendly, and the document produced was a valid will (if executed properly) that appeared to carry out my basic wishes. However, the process had some very crucial flaws.
Estate Tax Issues
The website that I choose—one of the more popular sites—warned that the will that I selected may not be suitable if the value of my estate exceeds the federal estate tax exemption amount. Good advice. However, the website inaccurately listed the federal exemption amount as $5,120,000 (it is currently $5,450,000). Additionally, the website did not explain which assets count towards the exemption amount. For example, a common misunderstanding is that the proceeds of a life insurance policy are not included in your estate for estate tax purposes. In fact, life insurance proceeds are included in your taxable estate if you were the owner of the policy when you died.
The website asks you to choose the state where you live. Minnesota currently imposes an estate tax on estates larger than $1,600,000, but there was no mention of that on the site. If my estate had exceeded that amount, the will that I created would not be suitable for my family. The failure to properly plan for estate taxes could result in a significant tax burden to your estate that may have otherwise been avoided.
Getting the Whole Picture
The problem with creating a will online is that a will is only one small piece of a much larger puzzle when it comes to estate planning. Currently, DIY estate planning simply cannot or does not address the whole picture. Estate planning attorneys look at a number of issues when advising you regarding your estate plan, including incapacity planning (using powers of attorney and health care directives), titling of assets, beneficiary designations, estate and income tax planning, probate avoidance techniques, creditor protection issues, and more.
To provide an example, I recently met with a family administering the estate of a loved one who had prepared his own will. The deceased person had named a sibling as personal representative to administer his estate and directed that his children should receive everything. The deceased person had also set up all of his financial assets to pass directly to his children by beneficiary designation. The only asset to be probated was his home, an asset that is exempt from estate creditor claims and administrative expenses.
This arrangement left the sibling with a lot of work to be completed and bills to pay, but no money to pay the bills or complete the work. This type of situation has become very common with the increasing popularity of the different non-probate transfers available to individuals. However, it may have been avoided if the deceased person had met with an estate planning lawyer before preparing his will.
The value that you receive when you hire an estate planning attorney is the advice and experience that the attorney provides. A website will provide you with an estate planning document for a small fee. Estate planning attorneys will provide you with the documents needed to carry out your estate plan, but more importantly, they will provide you with the professional advice needed to ensure your plan will be carried out properly.
Adam J. Rohne brings a personalized and knowledgeable approach to representing clients with issues involving estate planning, estate taxation, trust and estate administration, and guardianship and conservatorship law.
Adam is a graduate of the University of St. Thomas School of Law, where he represented clients in guardianship and conservatorship matters as a student attorney in the University’s Elder Law clinic. After completing law school, Adam opened his own law practice, where he focused on helping clients achieve their estate planning goals and advised clients in a variety of other legal matters. Adam enjoys being part of Hansen Dordell’s collegial team and working closely with Hansen Dordell’s clients in an assortment of trust and estate matters.
In 2016, Hansen Dordell is celebrating 70 years of excellence. Founded in 1946, the firm’s reputation for innovation, civility, and integrity endures to the present day. We thank our attorneys and our clients for their dedication and trust, and look forward to many more years of service.