Many people procrastinate when it comes to estate planning because they think that it is a huge task to undertake. They know that they should take care of this responsibility, so they embrace certain notions that can be described as “traps” because they can yield negative consequences.
We will look at a few of them here to provide some clarity so you know why you should probably avoid overly simplistic estate planning solutions.
Do-It-Yourself Estate Planning
There are a number of websites that sell generic, fill-in-the-blanks legal documents, including last wills and trusts. When you read their marketing material, you may come away with the impression that it is easy to plan your own estate using a template that you purchase and download.
Since we are estate planning attorneys, you may think that we have ulterior motives if we recommend against DIY estate planning. Actually, you do not have to take our word for it.
Several years ago, the highly respected publication and website Consumer Reports decided to put the matter of do-it-yourself estate planning under the microscope. They had staffers create last wills using downloads that they obtained from three of the leading online purveyors of legal documents.
Once the last wills were created, they engaged three highly respected legal professors that were affiliated with top-notch law schools. These attorneys found flaws in the documents, and their explanation convinced the people at Consumer Reports. They recommended against DIY estate planning unless the situation is extremely simple.
Joint Tenancy
If you own your own home, you can add someone else to the title or deed to become a co-owner. This is called the condition of joint tenancy, and it comes with right of survivorship. After the death of one joint tenant, the other one would assume total ownership of the property.
This transfer would not be subject to probate, which is a costly and time-consuming legal process that would enter the picture if you use a will to transfer a home or any other property.
The avoidance of probate is positive, and there is some undeniable efficiency. Come on the other side of the coin, you are taking a major risk if you decide to go this route.
As soon as you add a joint tenant to your ownership documents, they would own half of the property. Because of this, if the individual was to be on the wrong end of a legal action, the portion of the property that is owned by the embattled joint tenant could be attached.
There is another potential outcome to take into consideration. Since you would not own the property in its entirety, if you decide that you want to sell it for some reason, you would have to get the full cooperation of the joint tenant. You never know how someone may react under these circumstances.
Assuming That a Last Will is the Right Choice
One of the most common traps the people fall into is the idea that a last will is always the right asset transfer vehicle unless you are very wealthy. In fact, this is not the case at all.
A revocable living trust can be a far better option for a wide range of different people that are not among the financial elite. One benefit is that assets in the trust can be distributed to the beneficiaries outside of probate.
You can also include spendthrift protections, and you can name a disability trustee to administer the trust in the event of your incapacity. It should be noted that you lose no control of the assets while you are living, and you can change the terms of the trust at any time.
This is one alternative to a last will that is widely utilized, but there are others. You should discuss your options with a licensed estate planning attorney so you can act in a fully informed manner.
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