How to Help Your Clients Avoid the Pitfalls of DIY Estate Planning

Sheri Perkins, COO Trucendent

If you have clients thinking about leveraging a DIY service for estate planning instead of working with a professional estate planning attorney, walk them through these important conversation points first.

As the internet, social media and advances in technology make knowledge sharing increasingly accessible, we have become a do-it-yourself (DIY) culture.

From tax preparation to backsplash installations to fixing plumbing problems, there’s a low-cost, plug-and-play service or a helpful explainer video associated with almost every task you can think of. And DIY certainly has its place. Not only does taking care of something ourselves make us feel accomplished, but it also offers the benefit, or at least the assumed benefit, of cost savings.

But some projects are still best left to the professionals. Those cost savings go out the window, for example, if you rupture a water line trying to renovate your master bathroom.

Estate planning is another field fraught with complexity and nuance, requiring professional oversight and attention to detail to be handled successfully. And yet, DIY estate planning continues to escalate in popularity.

The American Bar Association took a deep dive into do-it-yourself estate planning and the emergence of internet-based, DIY legal providers, including Legal Zoom and, as well as the consequences individuals might face when taking a DIY approach to estate planning.

As a fiduciary, it’s your obligation to make sure your clients understand the potential ramifications of DIY estate planning

As a fiduciary, it’s your obligation to make sure your clients understand the potential ramifications of DIY estate planning—the long-term risks they may be assuming in exchange for short-term cost savings—and present them with as much information as you can to help them make the right decision for their circumstances, their budget and their legacy.

If you have clients thinking about leveraging a DIY service for estate planning instead of working with a professional estate planning attorney, walk them through these important conversation points first.

It’s likely your clients don’t know that, in order for their wills to be executed according to their wishes, they must use dispositive language to state their intent. In fact, it’s likely your clients don’t even know what dispositive language is—and why would they?

But not knowing the difference between “I give” and “I would like to give” could void the will entirely, or cause beneficiaries or family members to spend countless hours, not to mention thousands of dollars in legal fees, in appellate court trying to sort out your client’s intentions.

Estate planning attorneys spend their careers navigating nuances just like this to ensure your client’s wishes are carried out as intended.

Even the slightest complication can derail a DIY estate plan.

Some of your clients may think that because their estate plan is simple—modest assets to be left to a spouse and children, for example—they don’t need professional guidance.

But having multiple beneficiaries is itself a complication if the estate plan isn’t carefully vetted by an expert. What happens, for example, if your client’s estate is supposed to be split evenly between three children, but one was added to the client’s accounts as a joint owner before death? All of the liquid assets go to that child, because joint accounts do not pass by the terms of the will.

Now consider divorce, or wealth that’s tied up in a small business, or mandating care for special needs children, or beneficiaries that live internationally.

The list goes on, and those are just possible internal complications. State and federal estate tax laws are constantly changing, and increasing in complexity as they do. DIY legal services simply aren’t sophisticated enough to manage the intricacies of ever-evolving estate tax structures and exemption requirements.

Peace of mind is the most valuable legacy you can leave.

One of the greatest dangers of DIY estate planning services is the false sense of security they create. 

Your clients may think they have done everything necessary to take care of their loved ones, but with so much room for error, they may be leaving them susceptible to long legal battles, costly trips to court, and fighting within the family.

The bottom line is that certainty is worth paying for. Without professional estate planning guidance, your clients simply can’t know that they’re leaving behind the right legacy.

The value of professional estate planning for advisors

Being proactive and upfront with your clients about the importance of expert estate planning has benefits for you too. 

We can’t overstate the impact the impending wealth transfer will have on financial advisors working with the Baby Boomer generation. Over the course of the next 25 years, it’s estimated that roughly 45 million households will transfer a total of $70 million to heirs and charity—but 90-95% of children leave their parents’ advisors upon receiving their inheritance.

But what if you’re the advisor who provides strategy and guidance throughout the estate planning process? Estate planning by nature invites you to engage and begin building trust with your clients’ beneficiaries. 

Trucendent’s estate planning platform and network of vetted estate planning attorneys help advisors ensure their clients’ assets are aligned with their intended wishes, and provide the necessary tools for guiding clients through conversations about transferring wealth to the next generation.

Click here to learn more about Trucendent’s innovative hybrid approach to estate planning.

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