There are websites that sell boilerplate legal documents, including devices that are used in the field of estate planning. Most people do not have estate plans in place, and a lot of them are looking for quick solutions, and DIY estate planning is appealing to some.
You can put this big responsibility behind you by filling in the blanks on a form that you download, and you are good to go. This is the perception, but in reality, negative consequences can come about when you try to act alone without legal counsel.
There was a court case that came to a close this year that revolved around a do-it-yourself estate planning situation. A woman executed a durable power of attorney giving her son the ability to act on her behalf, or so she thought.
Her son sold her house after she entered a nursing home, and he was under the impression that he had every legal right to do so because he was her agent under the power of attorney.
This sounds rather straightforward, but there is a complication. His brother was living in the woman’s home at the time of the sale, and when he was asked to move, a legal battle ensued.
When they were in court, the power of attorney was examined, and it was actually a springing power of attorney. This means that it would only go into effect upon the incapacitation of the grantor.
The plaintiff contended that the power of attorney was never legally in effect because there had never been a formal diagnosis of incapacity.
Ultimately, the appeals court ruled in favor of the defendant. They based the decision on the fact that he had been acting on behalf of his mother for years prior to the sale, and she (and his siblings) never objected.
They came to the conclusion that she mistakenly created a springing durable power of attorney when she intended to convey the power immediately.
A lot of time and money was wasted in this case because of the error that was made by the woman. If she would have worked with an attorney to devise a plan, the relatively small investment would have paid dividends in the long run.
Make Informed Decisions
The potential for improper execution is one of the perils of DIY estate planning, and a general lack of information is another factor to take into consideration.
If you were going to plan your estate today using some type of download that you can get online, what document or documents would you create? Most people would say that they would execute a will to facilitate asset transfers after they are gone.
If you go in this direction, you would name an executor to act as the administrator. They would not be able to act independently with regard to the distribution of the inheritances. The will would be admitted to probate, and the court would supervise while the estate is being administered by the executor.
No bequests are distributed while the estate is being probated by the court, and it will take about nine months at minimum in most cases.
Another drawback is the expense factor because the executor must be paid, there is a filing fee, there can be legal and accounting charges, appraisal costs, liquidation expenses, etc.
If you use a living trust instead of a will, the drawbacks would be avoided. The trustee would distribute the assets to the beneficiaries and the court would not be involved.
This is just one of a number of different types of trusts that can be used to satisfy certain objectives.
In addition to the asset transfer part of the equation, you should address end-of-life eventualities when you are planning your estate.
If you have a living trust, you would act as the trustee while you are alive and well, and you can name a disability trustee to administer the trust in the event of your incapacity. A properly executed durable power of attorney can be added to account for property that is not held by a trust.
Your plan should also have advance directives for health care. A living will is used to state your life support preferences, and you can name a medical decision-maker in a durable power of attorney for health care.
We Are Here to Help!
Our doors are open if you are ready to work with a Los Angeles estate planning lawyer to put an ironclad estate plan in place. You can send us a message to set up a consultation appointment, and we can be reached by phone at 310-337-7696.