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In the age of online do-it-yourself forms and wanting to save money, what are the pros and cons of self-written or online Estate Planning documents versus going to see an Elder Law Attorney? We often have people come in with their 1–3-page Durable Power of Attorney and Healthcare Directives they created online. This is tempting and a relatively inexpensive way to take care of your estate planning needs. Just keep in mind, you get what you pay for. Online estate planning documents are cookie cutter forms that lack personal, customized guidance. An experienced Elder Law Attorney will conduct an in-depth discussion about your current financial needs, your health, and your future plans.

Life Happens- Be Prepared

We know that estate planning is a very important process that should be reviewed every few years. There are many stages of life that will signal a time for a review. Some examples are having children, loss of a spouse, divorce, detrimental diagnosis, children are now adults, etc. Estate planning is not only to guide family and loved one’s on where your things go when your time on earth is through. More importantly, it is to protect yourself and your loved ones while you are still alive. Planning ahead helps you stay in control of decisions made about your health and your finances. Also, it is to ensure you have options to prevent the loss of your hard-earned assets to the government and/or other expenses that may accrue from lack of planning.

Real Life Scenario #1:

A professional with approximately $4M in assets left his inheritance to his son and daughter via a trust.  The Daughter had a disabled minor child who was covered by Medicaid which paid the disabled grandchild’s medical expenses to the tune of $15K per month.  The inheritance to the Daughter disqualified the disabled grandchild of Medicaid benefits and now the Daughter is responsible to pay the $15K plus a month.  Private pay is more expensive than Medicaid pay.  They could have avoided this via a trust provision that set the Daughter’s inheritance aside in a “special needs trust” rather than giving the funds to her direct. An Elder Law Attorney could have helped avoid this scenario with insight on the personal family situation and the legal experience to address the granddaughter with special needs.

When is a Do-it-Yourself Estate Plan Insufficient?

(American Academy of Estate Planning Attorneys, Inc)

If you have any of the following items or needs, a Do-It-Yourself Estate Plan will not adequately cover your needs.

  • You own real estate
  • You own or share a small business
  • You have minor children
  • You have investments, including an IRA, 401(k) and/or a 403(b)
  • You have a spouse, child or a beneficiary with a disability and are currently or plan on receiving Medicaid or other government benefits
  • You have a beneficiary who has financial issues, bad habits, creditors, etc.
  • You are married and you and/or your spouse have children from a previous marriage
  • You wish to leave money to your grandchildren but not your children
  • You wish to disinherit your spouse or child
  • You fear a challenge to your will
  • You need asset protection

 Did You Know….

  • When you designate beneficiaries on accounts like life insurance policies, retirement accounts and investments, those beneficiaries will supersede a Will? Therefore, if you list your minor children on your accounts as beneficiaries, the court will have to step in and appoint a conservator to oversee the money until that child turns 18. At that time, the 18-year-old will get the money outright. Teenagers, even legally adult ones, are not usually known for their wise spending habits when given a lump sum of money.
  • Certain entities such as banks, hospitals, and even funeral homes, will not accept the documents you are presenting, even if they are valid. If you drafted them on your own, you have no way to enforce the validity of the documents. However, if you have a qualified Elder Law attorney prepare the documents, they are able to advocate for you as their client. Again, you get what you pay for. Don’t create a situation where you or your agent are going to be paying a lot more to resolve the issues.
  • Estate planning decisions can involve a great deal of complex decision-making and knowledge, particularly when taxes are involved. Working with an estate planning attorney and financial advisor well-versed in advanced estate tax planning strategies can help you weigh your options and find the best strategy to transfer wealth while minimizing taxes.

Estate Tax Planning Strategies:

    • Ensure stepped-up cost basis is maintained when property is transferred at death. For example, careful consideration should be made around lifetime gifts that may jeopardize a step-up in cost basis on property at death. When property is gifted, the party receiving the gift generally assumes the original cost basis. Additionally, certain trust provisions may be utilized to ensure that property receives a step-up in cost basis at death. (https://www.putnam.com/literature/pdf/II922.pdf)
      • The stepped-up basis (sometimes known as the step up cost basis) is a way of adjusting the capital gains tax. It applies to investment assets passed on death.
    • For tax year 2017, the estate tax exemption was $5.49 million for an individual, or twice that for a couple. However, the new tax plan increased that exemption to $12.06 million in 2022. (https://smartasset.com/taxes/all-about-the-estate-tax) The amount you can leave without state taxation might be much lower.

Life Changes, So Should Your Estate Plan

Creating an Estate Plan is just the first step in the estate planning process. The estate plan you created in your 30’s will be vastly different when you are in your 50’s. You want to periodically make sure your estate plan accurately reflects your current goals and requirements depending on what stage of life you are in. What changes do you need to be aware of when it comes to updating your estate plan?

  • Marriage
  • Divorce
  • Birth or adoption of children
  • Illness or incapacitation
  • Changes in tax or non-tax laws
  • Inheritance
  • Change in Assets
  • Death of a family member
  • Children are now adults

An elder law attorney will stay up to date on federal or state laws that can affect your plan and let you know when you might need to review yours. If you are not aware of changes in the law, it may cost you thousands of dollars by not taking advantage of new regulations.

You Get What You Pay For

You may feel like you are saving a lot of money on the front end by doing your own estate plan. However, it may not effectively carry out your wishes, provide financial stability to your spouse, children or other beneficiaries, or protect your assets for future generations. It will also make it very expensive for your Agent or Personal Representative (aka Executor) who has to go through probate because your estate does not properly have beneficiaries listed on your accounts, your home, or other property.

You don’t know what you don’t know. Talk to an Elder Law Attorney to find out what your best options are to protect you and your family while you are living, and to ensure your wants and wishes are carried out efficiently and effectively when you die. If you don’t take care of yourself and your family now by spending a little more money to make sure it is right, then you are going to get what you paid for. Someone else is going to have to pay a lot more on the back end for an attorney to go through probate court when you die, or you will have to spend down your money to get benefits if you or a loved one becomes sick and doesn’t die.