A will can be as simple as a few sentences handwritten on a piece of paper. It could also involve pages of instructions and integrate other estate planning tools, like a trust. The creation of a will is an important step for your protection and the protection of your dependent loved ones if something happens to you.
Although it may seem like the easiest and cheapest way to handle estate planning is to just create your own documents at home, you take some serious risks when you create a do-it-yourself (DIY) estate plan instead of getting professional help.
You might violate Minnesota probate laws
Perhaps the most obvious issue with creating your own will or other estate documents is that you aren’t a lawyer and don’t know the specific laws applying to estates probated in Minnesota. You can easily make a mistake with the instructions you leave.
For example, if you can’t divorce your spouse because of religious reasons, you might plan to disinherit them because of previous marital issues. However, disinheriting them would violate their rights under state law and might invalidate everything else in your documents.
You might fail to address important concerns
Establishing who receives what property when you die is only one part of the estate planning process. You should also consider what would happen in the event you become incapacitated. There are numerous decisions and practical issues that you should plan for which are easy to overlook if you don’t have a professional guiding you.
You might leave your biggest assets vulnerable
Even if you have a well-funded retirement plan, there is no way to predict what medical issues you could experience as you age. You may eventually need to pay for months or years of long-term care such as that offered by a nursing home. You will likely need to qualify for Medicaid in that situation to make it affordable.
If you cannot qualify for government benefits, you might die with tens of thousands of dollars worth of debt. Private creditors or Medicaid could make claims against your assets – including your home – after you die.
You might leave your loved ones open to massive tax liabilities
Estate taxes affect multimillion-dollar estates. If you intend to pass valuable property on to someone else, that may trigger taxes as high as 40%, which would substantially diminish the legacy you leave behind. It takes a lot of effort and knowledge to create a plan that minimizes estate tax risk.
Understanding how risky a DIY estate plan might be can help you make better decisions about your will.