Are you a self-proclaimed DIYer? Are you a bit of a “control freak,” but in a good way, of course? If so, you may have been tempted to create your own estate plan. You read a few articles on the internet (good old Google, Esq), listened to various podcasts, perused several blog posts online, and felt confident that you could protect your family’s future and legacy with an estate planning template found online. Well, you’re not alone. The internet has given numerous families a false sense of security when using affordable, online basic estate planning documents. However, often this one-size-fits-all approach to estate planning leads to disastrous consequences for your loved ones long after you’ve passed. These cookie-cutter templates fail to provide the benefits and protections afforded to you in a well-drafted estate plan by an experienced attorney.
I’ve outlined the top three mistakes that I’ve seen in my own practice when analyzing DIY estate plans. More times than I can remember, the firm has been called upon to clean up a mess left in the wake of a poorly constructed plan created entirely online by a layperson with the best of intentions. Most people have no idea what a headache they leave behind for their loved ones when cutting corners in the area of estate planning.
Failure to Properly Fund the Trust
Most people who create a revocable trust online fail to “fund” the trust with the assets from their trust. Improper funding is the number one reason trusts fail in Texas. Funding a trust simply means renaming or retitling your assets in the name of the trust. The assets will no longer be in your name as an individual but will now be in the name of your living revocable trust. For example, in order to move your homestead property into the trust, you must deed the home out of your name and into the name of the trust. Theoretically, the new “owner” of the property will be the trust. Thus, you will also need to contact your homeowner’s insurance company and add the trust as “an additional insured” on the policy.
What happens if you fail to move the home into the trust? If the property remains outside of the trust when you pass, your heirs will need to go to probate court seeking a judge’s order to transfer title to the property following your death. Additionally, stocks, bonds, and LLC ownerships need to be transferred into the trust. Insurance, investment accounts, savings, and checking accounts should be retitled in the trust’s name, or at the least, the trust should be named as a payable on death (POD) beneficiary. The failure to properly fund your trust will result in probate court for your heirs and defeat the entire purpose of creating the trust in the first place.
Erroneous Execution of the Estate Plan
In Texas, a legally executed will must contain the signature of the person creating the will (the testator), a notary public, and two “disinterested” witnesses to the will. These two witnesses must not be related to the testator by blood or marriage. The only exception to this requirement is the holographic will, which is a handwritten will entirely in the testator’s writing and signed by the testator. It’s imperative to keep in mind that failure to adhere to the state signature and witness requirements invalidates the entire will.
Special Provisions & Circumstances
Just as no two people are the same, no two estate plans are the same either. Each family is inherently unique and has special circumstances that need to be addressed in their estate plan. Basic standardized templates found online will not be customized or well suited to meet those needs. For example, let’s say you have three children and your youngest is immature and financially irresponsible. How do create an appropriate estate plan that protects the financially troubled child while not adversely affecting the inheritance of the other more mature children? Do you know how to implement safeguards to protect this financially reckless child from themself essentially? Online DIY templates will only get you so far and will not be tailored to your specific circumstances. We often work with clients that have assets in multiple states, are married to a spouse with children from a prior marriage, same-sex couples, or even those with messy, blended families with estranged relations. This list is not exhaustive by any means and could go on and on. However, the unique situations that arise in most families are rarely handled properly when using a standardized template from the internet.
Now that we have discussed a few of the grave pitfalls of being a DIYer in this facet of life, it’s time to dust off the old estate plan and take a closer look. If you have created your estate plan without the assistance of an experienced attorney, please consider contacting the Kazi Law Firm for an initial consultation. We would love to speak with you about your unique estate planning needs and create a customized plan for you and your loved ones. Why wait to protect your family’s future and legacy? Remember – Your heirs will thank you!