Can I Write My Own Estate Plan?

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Can I Write My Own Estate Plan?

As we have said before, estate planning is terribly difficult. Estate attorneys are expensive, the experience of working with them often awkward and frustrating, and the final set of documents wordy and confusing.

Most people hope to avoid the whole experience altogether. Alas, as I wrote in “How Frequently Should I Redo My Estate Plan?,” you should probably have tune-up meetings with an estate attorney every five years.

I’m sure most people’s reaction to that – admittedly mine as well – is to consider whether you can write and tune-up your own estate plan.

The shortest answer is yes, you can. Write the documents, sign and notarize them in front of witnesses, and store them in a safe place where your family can find them and you have written your own estate plan.

But just because you can, doesn’t mean you should. Estate plans have multiple goals.

First and foremost, they have the goal of distributing your assets after your death according to your wishes. An estate plan meets this goal if the correct entities receive the correct assets and amounts. Many people can accomplish this first goal.

Setting your beneficiary designations on all your retirement accounts is half the battle to distributing your assets. Beyond that, a simple will is capable of doing the rest of the work. The will still has to be clearly and legally written, but many online “do-it-yourself” services will accomplish this.

The second goal is to pass the maximum amount of money tax-free and fee-free to the beneficiaries. This means avoiding or minimizing court fees, probate taxes, estate taxes, and other costly services if at all possible.

This is where knowing estate law comes into play. If you don’t know what probate is or which estate taxes your assets may face, for example, you likely won’t be able to avoid them. Also, to the extent that you put complex and difficult requirements on your trustee, you may also drain the estate on account of attorney fees to implement your wishes.

Third and finally, an estate plan has the goal of making the process clear and easy for your executor. Being an executor is tough work that no one would wish upon their trusted friends or family, and yet you should select a trusted friend or family member. Being an executor is a part-time job, which is why simplicity is the third goal of an estate plan.

Clearly identifying your beneficiaries, providing transfer numbers for any charities you want to leave assets to, utilizing as many beneficiary designations as possible, avoiding probate, and minimizing the need for professionals all simplify your estate.

Some simple techniques you can do yourself, but many are legal techniques that estate attorneys know and which you would have to study in order to learn.

Together, these three goals – implementing your wishes, avoiding asset loss, and simplifying the process – are all you can hope from an estate plan.

Implementing your wishes is the easy part and the one where most people feel they could write it themselves. It is the other two, avoiding asset loss and simplicity, which are harder to implement by yourself.

If you already have some estate planning knowledge, you are more likely to succeed at drafting a reasonably good estate plan for yourself.

If you don’t though and you are really set on trying it yourself, think about the worst case scenario. In the worst case, your will is not accepted as a valid legal document. Then, your assets are left and a personal representative appointed via the intestate rules of the state(s) where you have residence or assets. In this worst case, the probate is long and difficult and your heirs have to hire an attorney, who takes an hourly rate. If you don’t mind this worst case scenario, then perhaps you are a good candidate for taking the will into your own hands.

All of that being said, people who own closely held businesses, family farms, rental property or other assets which require managing should hire the services of an estate attorney. Succession planning must be done carefully for the asset to pass cleanly to the next generation.

The same is true if you have valuable tangible assets. Art, technology, or other items which could be of great value can tear families apart if your estate plan isn’t careful.

Lastly, if you have complex wishes, you should use an estate attorney. More complex examples include wanting to put income restrictions on beneficiaries, leaving some assets to charitable entities, leaving assets to disabled beneficiaries, or ensuring equal inheritances to your beneficiaries including lifetime gifts made.

Estate attorneys are essential for these complex cases. Even for the simple ones, estate attorneys are better at meeting the three goals of estate planning than the “do-it-yourself” software. However, you are technically allowed to draft your own estate plan. If you do, be careful.

Photo used here under Flickr Creative Commons.

Follow Megan Russell:

Chief Operating Officer, CFP®, APMA®

Megan Russell has worked with Marotta Wealth Management most of her life. She loves to find ways to make the complexities of financial planning accessible to everyone. She is the author of over 800 financial articles and is known for her expertise on tax planning.

Follow David John Marotta:

President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.