A will or trust are two of the most important and fundamental planning documents needed by nearly everyone, especially as you move toward retirement. Yet an astonishing number of people of all ages still don’t have one or the other. Psychological factors are at play–it’s extremely stressful to confront one’s own mortality. Plus it’s painful to spend money on estate planning, because you don’t live to reap the benefits even if you know your heirs will.
Purveyors of do-it-yourself books, software and online forms are trying to change that. The cookie cutter documents they sell to help you generate a will cost a fraction of what many lawyers charge. Fueled by the technological revolution, these products have proliferated in recent years, with at least a dozen offered online, plus many books and assorted boxed software.
This development makes me cringe–so much, that I won’t mention specific products in this article, because I don’t want any of them saying in promotional materials, “As mentioned in the Astill Law Firm Blog (I should be so famous!).”
Why am I strenuously opposed to do-it-yourself wills and trusts? There are just so many things that can go wrong–from the wording of the document, to the required formalities for how it must be signed and witnessed before it can be valid. I make it a hobby of collecting DIY horror stories. And I’ve gathered some doozies. As one lawyer in Indiana has said, “using a DIY will is like pulling your own tooth with a pair of pliers instead of going to the dentist”. No kidding, for those of us who practice in this area, it is too similar to be funny. Likewise, if you use an attorney who does not regularly practice in the estate planning field, it’s like getting your oral surgery done by the person who cleans your teeth.
One sad example involved Charles Kuralt, the CBS News correspondent and anchor. Several weeks before he died in 1997, he penned a note to Patricia Elizabeth Shannon, his mistress for 29 years, promising to leave her 90 acres and a renovated schoolhouse near the Montana fishing retreat where they spent time together. After Kuralt’s death, his family and Shannon spent six years in court fighting over whether this note was a valid amendment to the 1994 Will that a lawyer had prepared, or simply a promise to revise the document–a promise that Kuralt never carried out. Without ruling on this issue, a Montana court awarded Shannon the $600,000 property but stuck Kuralt’s family with all the estate taxes. Surprised that a prominent and wealthy public figure would not have ironed out all of these details? Don’t be, it’s all too common.
Proponents of self-help products argue that a DIY will is better than having no will. But they’re only partially right – or they can be so wrong it hurts. I give them credit for educating people about the dangers of not having a will. Without one, if your children are minors and you were a single or surviving parent, a court would appoint a guardian for them, and it might not be someone you choose. And, state law determines how most of your belongings are distributed. Whatever is left after taxes would be distributed to the persons specified under the law. It’s called the laws of intestacy (a fancy lawyer word for “died without a valid will”). This law, which varies from state to state, establishes a ranking of inheritors from people who die without a will or living trust. Some newer laws say everything will go first to the spouse, then to children, parents and siblings. However, plenty of state laws still divide an estate between the surviving spouse and children in preset proportions, especially if there were children of a prior marriage (that’s what Utah does). But what the DIY folks don’t usually mention, and many people don’t realize, is that the laws of intestacy also apply if you foul up a DIY will.
In one instance we heard of several years ago, a father was estranged from one of his children and wanted to disinherit him. Dad bought DIY will software from a big-box store and, following the prompts, listed his assets and made gifts to children, but omitted some important ones: small numbers of shares of various phone company stocks that he had bought many years earlier. Those shares, which probably once seemed like peanuts, had grown in value because of mergers and stock splits and were worth several million dollars, and made up the largest part of Dad’s estate by the time he died.
Because Dad did not understand how important it was to have a residuary clause, and the DIY software didn’t explain it in a way that a lay person could understand, the DIY will was completed without such a clause. A residuary clause, by the way, is a clause that says, “after everything else is paid for and if there’s anything left, here’s who it goes to…” So guess what happened? The stocks passed according to the law of intestacy, and the son, who the father wanted to disinherit, walked away with almost $400,000. To make matters worse, he had a substance abuse problem and blew through the money in less than a year. Not the intended result right?
Another case had a blank where it said [Insert Name Here]. Dad overlooked the blank and guess what? The State in which he died inherited that “no name” property. Yuk!
Lastly, even signing of the will or trust can be tricky. The law provides some pretty specific signing requirements for wills for a good reason…the avoidance of fraud and undue influence. But it also trips people up. Witnesses have to be in the presence of the signer of the will, and of each other, as each signature is made. One of the earliest cases I ever read on estate planning involved a witness who signed a will, and then walked away for a minute while the other witness signed…IT WAS INVALID! Those things are not well explained in most DIY programs. And even if they are, you have to be a pretty detail oriented person to get it right.
These are just a small sample of problems. I’ve seen too many examples already come into my office from people who did DIY wills. So what’s the answer? Get a competent Estate Planning Attorney to help you do it right. Compared to the cost of lawsuits in the estate, or inheritances going to an unintended beneficiary, or having an invalid will, the services of a good attorney are pretty inexpensive.