Dangers of do-it-yourself estate planning

Dangers of do-it-yourself estate planning

Dangers of do-it-yourself estate planning

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In response to COVID-19, financial services firms and online companies are offering a variety of self-made digital estate plans. These low-cost plans entice anxious families to explore these options in an effort to avoid the expense of an attorney. Not everyone has the ability to correctly prepare their own documents even with the convenience of the templates offered online. Others, who try on their own, could create problems rather than solutions. It is not easy to correctly prepare estate planning documents without the aid of an attorney, but it is easy to make significant mistakes which can be costly to correct or cause irreparable damage.

One of the most common mistakes involves the misinterpretation and misunderstanding of legal terms and their significance in legal documents. What is “issue”? What are “heirs at law”? What do “per capita” and “per stirpes” mean? Oftentimes, incorrect assumptions are made about the meaning of these words and others or they are ignored and dismissed as “legal jargon”, inadvertently leading to an estate plan contrary to the intent of the grantor or testator, such as leaving assets to unintended beneficiaries.

In like manner, the disinheritance clause and no-contest clause, while often very important, are frequently misconstrued. Additionally, in self-drafted documents, the language explaining why certain people are not included is absent, consequently increasing the chances of litigation after the grantor’s or testator’s death.

Similarly, the language used by online companies or clients themselves is often vague and unclear, resulting in unnecessary conflict and, frequently, in litigation that was intended to be avoided and could have been avoided if the estate planning documents were correctly drafted by an attorney in the first place. Likewise, a failure to tailor the estate plan in accordance with the particular state’s laws can lead to mistakes and unintended financial and personal consequences.

It is not uncommon that online or self-drafted documents fail to appreciate the various tax implications involved in a client’s estate or fail to consider all the issues associated with minor beneficiaries. Also, frequently, while changing a provision in a document, a change is implanted only in one part of the document, leaving other parts of the document impacted by this change unrevised and, subsequently, creating several probable interpretations and questions about the grantor’s or testator’s intent.

Online estate plans rarely contain all the documents that constitute a comprehensive estate planning portfolio. Similarly, it is very easy for an individual to fail to appreciate the role of each separate document and their importance and relevance in each specific case. For example, an online trust document might be missing a property schedule or the health power of attorney might not contain all of the individual’s wishes and desires.

Lastly, the online or self-execution of the estate planning documents often occurs without observing legal formalities such as notarization and the presence of competent witnesses. This absence of legal formalities consequently creates an invalid and inoperative document.

In today’s world, it is tempting to prepare an estate planning portfolio yourself or online. Be aware that by doing so, you might be creating more complications than resolutions. It is worth it to get your estate plan done right the first time by an attorney.

7. Download our FREE Estate Planning Guide

Download our FREE Estate Planning Guide

Click here to view original web page at 7. Download our FREE Estate Planning Guide

What a strange time to be alive.

Some people have been in quarantine for nearly two months, while others are still adjusting after “only” (those are sarcastic quotation marks) a few weeks in isolation.

No matter which way you slice it, Coronavirus (COVID-19) has affected all of us.

I’ve talked with a lot of people over the past month who desperately want to create or update their estate plans to deal with Coronavirus but who don’t want to go to an attorney’s office.

Although I have written before about the dangers of “Do It Yourself” estate planning, here are 7 things you can do during quarantine to organize your affairs WITHOUT needing to leave home:

1. Draft a letter of instruction.

If you died today, would your representatives know how to settle your estate?

The purpose of an estate planning letter of instruction is to provide information to help guide your loved ones or other representatives through the process of settling your affairs.

I’m not talking about advice regarding probate or other legal matters. I’m talking about information that isn’t included in any of the documents you will get from an attorney.

A letter of instruction can answer questions such as:

  • Who should be notified of your death?
  • How can your family claim benefits under a life insurance policy?
  • What information is needed to obtain retirement benefits?
  • Who is your lawyer? financial advisor? CPA? insurance agent?
  • What subscriptions should be canceled after your death?
  • Where is the key to your safe deposit box?
  • How should your representative dispose of your personal effects and belongings?
  • Etc., etc., etc.

Imagine that you could stand over the shoulders of your representatives and tell them exactly what needs to be done to settle your estate. That’s how you should approach your letter of instruction.

For more ideas, read my article about writing an estate planning letter of instruction.

2. Review beneficiary designations.

When did your last review the beneficiaries named on your IRA, 401(k), or insurance policies?

This is very easy to do while you are stuck at home. And it can avoid a lot of trouble.

Failing to review your beneficiary designations — and to coordinate them with your estate plan — can lead to unintended, even disastrous consequences. Consider these examples:

Example 1: Your son James is designated as the beneficiary on your life insurance policy. Sadly, however, James dies before you and you forget ti name a replacement beneficiary. If you die without a living beneficiary named, then that policy may need to be probated.

Example 2: After your first child, Mary, is born, you purchase a $1 million life insurance policy and name her as the beneficiary. Several years later you have another child, Sam, and decide to make a Will leaving everything equally to your two children. But if you don’t add Sam as a beneficiary on the life insurance policy, Mary will get $1 million more than Sam after your death.

Example 3: Your IRA lists your two kids, Jack and Jill, as beneficiaries. But then you and Jill have a falling out, so you make a Trust that says Jill gets nothing. Unless you remove Jill as a beneficiary on the IRA, then she will still get half of the IRA after your death — regardless of what the Trust says.

I could list a dozen other examples, but they all speak to the same point: It is crucial that you regularly review and, if necessary, update the beneficiaries named on your assets.

Just remember: beneficiary designations can override the terms of your estate plan.

So before making any changes, read this article about mistakes to avoid when naming beneficiaries.

Additionally, I suggest consulting with your estate planning attorney and/or your financial advisor when changing beneficiaries to make sure the change won’t have any undesirable effects.

3. Inventory your assets.

When you die, how will your representatives know where all your “stuff” is?

Your family may know where you bank or what cars you have, but do they know the legal description of your mineral rights? Whether you have a prepaid funeral plan? Who manages your IRA or 401(k)?

To help your representatives, make an inventory of your assets including:

  • A description of the asset (e.g., the year, make, model, and VIN for a car)
  • Where the asset is located (e.g., at which bank an account is held)
  • Information needed to access the asset (e.g., a password or other security information)
  • Where the title, if any, can be found (e.g., where do you keep the deed to your house?)
  • An approximate or best-guess value of the asset
  • Any other information you think is relevant.

Making an inventory is one of the easiest items on this list. The key is simply to update it regularly.

Remember, however, that an inventory will NOT convey those assets to the persons you want to have them. It is for reference only and is not a substitute for a Will or a Trust.

4. Create a digital estate plan.

You have digital assets, even if you don’t realize it.

There are a lot of definitions of “digital assets” out there, but it includes basically everything you have that is stored online or in digital or electronic form: social media accounts, photos, computer documents, email accounts, domain names, ebooks, music, apps, etc.

And like other assets, something has to happen to your digital assets after your death. So ask yourself:

  • What will happen to your Facebook account after your die?
  • Will your photos on Flickr or Instagram be deleted?
  • Can someone save your family videos from a private YouTube channel?
  • How can you make sure someone inherits your Bitcoin?
  • Who gets control of your e-mail account?

The answer to all of these questions depends on your digital estate plan.

Although some aspects of digital estate planning must be included or authorized in a Will or Trust, there are a lot of things you can do on your own while in quarantine.

Read my 5 tips on how to create a digital estate plan for more information.

5. Organize your business information.

An estate plan for an entrepreneur or business owner should include another dimension: instructions for the management or winding up of your business after your death.

Often, only one member of the family understands the operations and finances of a family business.

But what happens when that family member dies?

Even if you have talked with a child or other relative about running the business, it is still overwhelming for that person to take over the business when he cannot find all the information that he needs.

You can make that transition much easier by organizing your business information in one place.

Think of this document like the business version of the personal letter of instruction explained above. What information (e.g., tax, utility, subscriptions or services) would someone need to know to run the business?

You can take things a step further by creating a business succession plan to make the legal transition of the business after your death a lot smoother.

But unlike the other items in this list, I highly recommend that a succession plan be prepared by or with the advice of an attorney. So maybe wait until after quarantine for that part.

6. Conduct a “fire drill”

A letter of instruction is great, but writing is sometimes vague and things often get lost in translation.

That is why you should also conduct an estate planning “fire drill.”

Just as fire drills in school let you know what to do in the event of a fire, an estate planning fire drill is meant to let your family know what to do after your death.

To hold an estate planning fire drill, walk your family through the process of everything they must do to set your affairs in order after you have died.

Yes, it’s a morbid way to spend time with family.

But it makes administering your estate so much easier on your loved ones after your death. Because even though they will be grieving, they will at least know what to do.

For ideas about what to discuss with your family, read our post on holding an estate planning fire drill.

7. Download our FREE Estate Planning Guide

Education is crucial in estate planning.

At Postic & Bates, we strive to help our clients understand all of the estate planning options available to them and what their documents mean.

But you can also educate yourself.

That’s why we created a 60+ page guide full of detailed information about estate planning.

Simply click the button below to get your FREE copy of our Estate Planning Guide:

Consult with an estate planning attorney

There’s no time like the present to tackle the tasks discussed above, especially when you’re trapped at home in quarantine and really don’t have any other choice…

However, just because you can do something by yourself doesn’t mean you will do it correctly or that the things you do will not have unintended consequences on the rest of your estate plan.

To consult with a legal professional about the issues discussed above — or to discuss creating or updating your estate plan — contact the experienced Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation telephone consultation by clicking the button below.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Thinking about retirement? Don’t forget about your tech.

Thinking about retirement? Don’t forget about your tech.

Thinking about retirement? Don’t forget about your tech.

Click here to view original web page at Thinking about retirement? Don’t forget about your tech.

technology and retirees, boss magazine

By Anne-Frances Hutchinson

Here’s an open secret about Americans on the cusp of retirement age: They know how to use technology. Having been in the workforce as the digital age gestated from a fever dream into the driver of nearly every aspect of work and life in the developed world, this cohort understands its transformative power at a level digital natives have yet to grasp. Over the next decade, roughly 132 million Americans 50 and older will spend over $84 billion annually on technology.

As they approach retirement, affluent, well educated seniors are still driving technological development, participating in the digital economy as it grows and changes, and preparing for an aging process that will be largely dependent on emerging technologies to increase satisfaction, comfort, and life expectancy.

However, one of the profound changes retirement brings is access to technology. Leaving the workplace can mean losing a wealth of expensive support, from high speed internet connections and the software programs that allow seamless communication, to hardware that can be impossible to afford on a budget. And yes, that includes the person in IT who knows how to convert documents into PDFs. (Here’s another deeply held secret from a boomer: They absolutely know how to do that. They just love to see your reaction when they ask for your help. Eyerolls are always funny.)

technology and retirees, boss magazine

Teasing aside, here are five critical considerations to make before transitioning out of the tech rich workplace.

  1. Make cyber security a priority. The loss of a workplace IT infrastructure means heightened exposure to hacking, so deepening your personal knowledge about security breaches and investing in affordable, personal use security tools is a must. Don’t be put off by any implied condescension you might perceive by seeking simplified help – Internet 101.org is a great place to start the process.
  2. Forget about remembering passwords. Leaving the office shouldn’t mean swapping strong protection of digital assets for passwords that are easy to remember and a breeze for hackers to exploit. Encrypted password managers such as 1Password provide affordable protection, generous storage, and email support.
  3. Enroll in autopay. Just because you’re retired doesn’t mean the bills stop. Making sure they get paid automatically, on time, every month will take a huge weight off your shoulders. On the flip side, any income you have still have coming in: social security, a pension, etc., you can arrange to be automatically deposited in the account of your choosing. Being retired means you should be out there enjoying life, not spending several hours a week doing amateur accounting.
  4. Set up online trading. You want your money to last through a long retirement. Now that you have more time, you might want to take a more hands-on approach to your investments. Services such as Ally Invest and E-Trade make it simple and easy to manage your portfolio and do self-directed trades on a daily basis.
  5. Compromise smartly. The temptation to sacrifice capability for cost can be very compelling, especially when it comes to smartphones. While there is a fun new crop of flip phones hitting the market that may take you back to the simpler days of flip up and gab, like the updated foldable Motorola Razr, prioritize the features that are most important to you — whether it’s a great camera, the ability to use multiple apps, or mil-std ruggedization — and make sure the phone of your choice makes the grade. You’ll want something that can still keep up with your lifestyle and let you video chat with the grandkids.
  6. Think before you ditch. Switching away from a “does it all” desktop system to a tablet or laptop may make sense from a portability standpoint, but be sure your computer investments match the quality of life you’re expecting. Desktops can be much cheaper to buy than laptops, giving you the freedom to buy both. Desktop performance is better, more flexible, and far more robust than tablets; laptops that offer equivalent desktop performance are typically cumbersome and heavy despite being optimized for mobility. If you’re a gamer, crafter, or have a penchant for art, having a desktop in your post-work tech arsenal will be a very worthwhile spend.
  7. Plan your digital estate. You’re planning to leave your work environment, not your entire life, but now is the time to think about what may happen to your digital identity and it’s a risky aspect of estate planning to neglect. In the Digital Cheat Sheet, Everplans recommends the following steps to take:
  • Make a list of all your digital assets and make a plan on how they should be accessed after your passing. This includes your personal data, passwords, and hardware.
  • Choose an executor for these assets who will follow your wishes on erasing, preserving, or sharing data, and with whom you want your digital legacy to be shared.
  • Store this information where it can be readily accessed by a trusted family member, attorney, or your appointed executor.
  • Legalize your wishes. With the exception of Louisiana, Kentucky, and the District of Columbia, there are state provisions for digital asset legalization. Work with your estate planner to incorporate your digital assets into your will. Remember: Never include passwords or private data in your will, as it is a public document that anyone can access.
technology and retirees, boss magazine

Retirement isn’t the end of your life, it’s the beginning of enjoying what you’ve worked so hard for. Set yourself up for success much the same way you did in your career. There’s a whole world of things to do that you might have missed out on. A smart retirement will enable you to make the most of your time while living on the go. Get after it!