Top 3 Do It Yourself Estate Planning Strategies – and Reasons To Hire A Professional
Strategy 1: I’ll just write my own will!
Reasons to avoid it:
- If certain formalities are not followed, may be unenforceable – not worth the paper it’s written on
- If anything in your will is ambiguous, or if certain contingencies are left undefined, all will have to be resolved in court
- Loved ones will be hit with the cost and the pain of probate, for real estate (tens of thousands of dollars more than proper estate planning with an attorney)
Strategy 2: I’ll leave everything to Big Sister, and ask her to make gifts on my behalf; she’ll take care of it!
Reasons to Avoid it:
- No “legal strings” – you’re basically asking your sister to do you a favor, and share your stuff, which at the point after your death is legally hers, with the people of your choosing. There’s no mechanism in place to actually ensure that your wishes will be honored
- Potential tax consequences, with real estate transfers. Because with this mechanism, your real estate will legally belong to your sister before she transfers it to the intended beneficiary, the Tax Assessor will treat it as a taxable transfer, and will reassess the taxes on the property. There can also be a second reassessment on the subsequent transfer to your intended beneficiary.
- Potential gift tax consequences for transfers from sister to your intended beneficiary.
Strategy 3: We’ll just add our child to the title of our home
Reasons to Avoid it:
- Child gets married, then divorced: the soon-to-be ex-spouse may now have a potential claim to a portion of your house
- Child passes away, with no estate planning: his spouse will now own a portion of your house
- Child wants to buy a house on his own: but he may have difficulties qualifying for a mortgage, as his name is already associated with your house
Estate planning is a complicated field, and all estate planning transactions may have legal, financial, and personal consequences. Consulting a professional will be cheaper, safer, and more reliable, in the long run. We can discuss your specific situation.
"I would highly recommend Marina. She has a very efficient process and is very meticulous when it comes to details. She helped us think through our trust and will issues very carefully. We left with completed paperwork after just two meetings. A huge relief for us, given we put off the process for ten years."
- Stephanie G., as posted on Yelp on 9/21/11