A Few Documents vs. A Plan

To a certain extent, everyone knows they should “get a will.” Some people go even further and say, “I need to get a will, a trust, powers of attorney, and an advance directive.” Most people assume the documents are all they need. Therefore, they go with the cheapest way to get a will, which is generally an online DIY estate plan kit, a bank, or someone through work that is inexpensive.

While having these documents is generally better than not having them at all, the documents themselves are just tools. To really secure your family’s future, you must understand how to use these tools. Unfortunately, online DIY kits, banks, and other places (that aren’t a reputable attorney) where you can get these documents generally do not explain how to use them and how to get the most out of them. The results of simply having a few documents versus having a complete estate plan (which includes the documents) can be drastically different. Let’s look at some examples:

Great Tools in Uniformed Hands

Power tools are some of the best tools on the planet. However, you know as well as I do that if you don’t know how to use them properly, the results can be disastrous. It’s no different with your estate planning documents.

Let’s say you decide to go with the cheapest option you can find, but still get to work with an attorney (usually at or through a bank). You should get a will, a few powers of attorney, an advance directive, and maybe even a trust. Since an attorney is drafting these documents, they are all legal and perfect as far as your wishes. However, this bank attorney (or other low cost attorney) generally will not explain to you how to use your will and trust.

A question that many people ask is “Does having a will avoid probate?”, and the answer to that is simply no. A will allows your estate to be probated according to your wishes, but it will not avoid the probate process altogether For those who don’t want the court involved because of privacy or court cost concerns, a trust is generally recommended and the bank attorney should tell you that trusts avoid probate.

While all of this is correct, that attorney will most likely not explain to you that you must transfer everything into the trust, or else it will go into probate and render the trust pointless. Furthermore, that attorney likely will not explain the many other ways of avoiding probate, such as making sure you have pay on death and beneficiary designations on bank accounts and retirement accounts. That attorney also is not likely to fully explain and help you understand what probate really is… but you have your documents!

So, what happens when you have documents without a plan? You likely haven’t set up your beneficiary designations properly (to go into your trust or directly to your loved ones). This means these things now go through probate! While the probate fees will not necessarily eat up a lot of your money, the legal fees likely will. Furthermore, your loved ones will have to wait months to get their inheritance, and that is if the legal fees don’t eat up all their money.

Unfortunately, this kind of situation is all too common. Just remember, it’s not your fault. The attorney you went to failed to explain all these things to you, which they should have done as part of the process. In the end you get what you pay for, and your loved ones end up paying the price on the back end.

Great Tools in Informed Hands

Great tools in uninformed hands lead to problems for your loved ones. However, these same great tools in informed hands can make you a hero to your loved ones. Let’s look at the informed scenario:

You’ve decided to go with an estate planning attorney that costs more than the “affordable” online kits and bank attorneys. However, you know that you’re going to get a plan that is perfectly tailored to your wants and needs.

This attorney makes sure first and foremost that you understand how your assets are passed to your loved ones, how probate works, what your loved ones will have to endure with each option for your plan, and make suggestions based on your wishes.

This attorney then drafts your documents, but also explains how to get the most out of them. This attorney explains how to fund a trust if you have one, or how to use your will as a “fail-safe” if assets do end up in probate. This attorney makes sure you understand your plan and guides you through some things you must do to make the most out of your plan. The best estate planning attorneys will even discuss your need for life insurance, long term care insurance, and other types of insurance that may be necessary to protect your family’s future.

You walk out of a meeting with this attorney feeling absolutely confident that your family’s future is secure should something happen to you. When you do finally pass, your loved ones likely do not have to deal with probate, they are likely able to get their inheritance very quickly, and, most importantly, your loved ones have little to no added stress in trying to administer your estate. Isn’t lightening the burden on your loved ones worth the extra cost up front?

The Bottom Line

The bottom line is estate planning documents are great tools in securing your family’s future. However, in the uninformed (wrong) hands, they can tear down everything you have worked for to give your loved ones when you are gone. In the informed (right) hands, they can build a secure future for your loved ones that can last generations.

Please, for your loved ones’ sake, do not find a way to “just get a will” or “just get the basic estate planning documents.” You are setting your loved ones up for less than what you could be giving them. Instead, seek out a reputable estate planning attorney who will give you the documents as well as a plan on how to use them. They are likely to cost more up front, but that extra cost is certainly worth it to have confidence in your family’s future.

Have questions about creating a complete estate plan? Or are you ready to create a plan so you can gain confidence in your family’s future? Please reach out to me at LawofZACooper.com/Contact!