Do You Know 3 Reasons Why DIY Estate Planning May Backfire on Your Beneficiaries?
Do you find DIY projects challenging and fun? Are you considering a do-it-yourself estate plan? Are you thinking, what could go wrong, better to have a DIY estate plan than no estate plan? Unfortunately, there could be a lot that goes wrong or backfires. If you decide to write your own estate plan without seeking counsel from a qualified estate planning attorney, you could run into a lot of legal issues as time goes by.
For instance, your heirs may have to go to probate court with a judge making decisions on what happens to your estate because what you wrote in your DIY estate plan was unclear or against legal statutes. Worse case scenario, your heirs could be stuck with what you wrote even if the end result is unfair and not what you intended. Beneficiary designations is definitely one area where this can be an issue..
We would like to share with you three reasons why a DIY estate plan can go wrong or backfire because of your beneficiary designations.
1. You Did Not Know the Rules About Beneficiary Designations. The rules on beneficiary designations always govern what happens to your estate, and you may not know the rules. For example, when you open a bank account, a brokerage account, or a retirement plan, you will be asked to designate one or more beneficiaries. You know that whoever you write down in that beneficiary box is the person or people who will receive the remainder of the account when you pass away. Remember, though, it does not matter if you write a different name or names in your will or estate plan. What matters is that whatever is written on the beneficiary designation form for any account is what will happen. With your DIY estate plan, you may not understand this, and think you have taken care of your beneficiary designations correctly when you really have not.
2. You Failed to Update Beneficiary Designations. Now, perhaps you have gone over the beneficiary designation rules and you understand that your estate plan has to match what you put on the forms for your accounts. However, with your DIY estate plan, you could still err when it comes to making regular updates. Every single time you decide you want to change a beneficiary designation you have to do it both on your accounts and in your estate plan. This may all be avoided if you discuss your estate planning needs with a qualified estate planning attorney.
3. You Make Your Estate a Beneficiary. You might decide to try and skip over everything by making your estate the beneficiary of every account. If you do this in your DIY estate plan, however, you could run into unintended tax consequences. As stated in number two, you should consult an estate planning attorney for more information.
We know this topic may raise more questions that it answers and want to help you plan for the future, and the unexpected. Whether you're young and single or a married five-time great grandparent, your voice and wishes need to be known. Worley Elder Law, based in beautiful Bradenton, Florida, focuses on helping you understand your options in designing your Estate Plan or Elder Law needs. Whether it's preventative incapacity planning or establishing your legacy, we will take the time to explain every option and work with you to create a customized plan just as unique as you and your family are. Please do not hesitate to contact us to let us help you.