Quality Matters: Estate Planning Is No Exception
The other day, my hot water tank broke. At first, I just thought the pilot light went out. I was easily able to follow the directions to get the pilot light back on, but the water didn’t heat up. So, I went back and read the sticker on the water tank to try to trouble shoot. I figured out by counting the blinking lights what was wrong: a valve needed to be replaced. I wanted to save money and do it myself, but I called a plumber to make sure it was fixed properly to save me time and money in the future. At some point, I’d imagine that most people come to the same conclusion and pick up the phone to call a professional. After all, they are someone who has been trained in installing and repairing hot water tanks, among other skills.
The same should go for estate planning.
While you may think you’re saving yourself some money by creating your own estate plan, the quick DIY usually ends up failing – and, ultimately, you’re left calling in a professional to repair the mess. To put it bluntly, there is a reason attorneys attend so much school. Even after graduating from law school, it still takes time to gain experience and develop an expertise in the practice area. Sure, there are different ways for attorneys to get that experience, but foundationally, they still possess the knowledge base and skill set needed to ensure that individuals and families are able to leave their assets, including businesses, as they intend and plan while they are living.
Similar to whether or not my DIY plumbing repairs would last, an estate plan prepared by a DIYer will not receive the level of quality, accuracy and service that’s needed to ensure that documents are held up in a court of law or work as the individual had hoped.
The Problem With Online Services
There are many online legal services, and there are even some estate planning YouTube videos—yes, I checked. But even a simple document may not be prepared or executed properly. If an individual is taking the time to create estate planning documents such as a will, a trust and power of attorney, I would assume he or she wants that document to work as intended. Typically, these online services only require you to fill in the blank and then the document is generated.
Often, these clients don’t realize the multitude of different aspects that go into an estate plan, including different situations, federal and state estate planning laws, tax law, family law and dynamics, contingencies and consequences. Even when a client has limited assets, the client often doesn’t realize the complexity needed to make sure the plan follows the client’s wishes. Non-attorneys cannot give legal advice – even attorneys who do not practice trust and estates do not have the expertise to prepare a solid plan. While the DIYer might save money on the front-end during the client’s life, once the client has passed away, it can be very costly for the family.
The Unintended Consequences of Poor Planning
Power of Attorney
I have frequently been involved after the fact in situations where Healthcare and Durable Financial Power of Attorney (POA) documents were not prepared or not prepared correctly, and the client loses the capacity to make decisions. Often, the POAs don’t exist or the POA is not valid and in Ohio, for example, a Guardian of the estate for financial decisions and Guardian of the Person for healthcare decisions must be appointed by the Probate Court. Even when everyone agrees who the Guardian(s) should be, it is timely and expensive. Furthermore, if a loved one disagrees, it becomes litigious and expensive. Typically, when the appointment becomes adversarial, the Probate Judge will appoint a neutral third party who likely has had no prior relationship which the individual (Ward). Therefore, the guardianship process is timely, expensive and certainly does not have the outcome the individual intended. On top of a third party making decisions for the client, the family relationships usually become torn apart and it can be devastating.
Will
Another situation may arise when a will is not executed properly. Every state has different requirements. If a will is not prepared and signed according to state law, the will won’t be valid upon the client’s death. If a will is not valid, the court looks to the state intestate statute, which comes into play when there is no will. Every state law is different, but the law typically leaves assets divided different ways between spouse, children, grandchildren, etc. Often, people who the client didn’t want to inherit will inherit and vice versa.
Estate Tax
Every state has different estate tax or death tax statutes. Some states, such as Ohio, no longer have an estate tax. While other states, such as New York, have them. Currently in 2023, an individual’s estate will be federally taxed between 18% and 40% on assets over $12.92. However, the exemption is likely going down to approximately $7.4 million per individual in 2026. Thus, it is very important for wealthy individuals to engage an Estate Planning attorney to strategize the best ways to minimize the estate tax, take care of their families and also find ways to help with charitable wishes.
Estate Planning and Business Succession Planning Attorneys
Estate planning and business succession planning attorneys also help families with businesses in their efforts to pass down, or to wind down, the businesses. Estate planners will often work with corporate attorneys to ensure these planning issues work as intended.
Finally, estate planning attorneys will work to help a client avoid probate. There are different tools to accomplish probate avoidance which can easily be done incorrectly by a DIYer. If an estate isn’t executed properly or a trust isn’t funded as it is supposed to be, assets which could have been easily passed on at death often end up in the probate process. A recent client of mine, the surviving spouse, paid more than $60,000 to move assets through probate. If her deceased husband had worked with an attorney to prepare a trust and had his finances in order, the cost would have been a fraction up front before he passed away. His estate plan, if properly prepared ahead of time, would have cost approximately 5% of the probate fees.
Additional Considerations
Other considerations for families includes making plans for blended families, children with special needs, planning for incapacity, debt protection of inheritance to loved ones and protecting assets from long-term care costs, if possible. All too often, when individuals try to do it themselves, they or their loved ones will end up paying for it both financially and emotionally in the end.
For further questions or clarification, please contact KJK Estate, Wealth & Succession Planning Attorney Susan Friedman (SLF@kjk.com; 216.736.7272).