Do-it-Yourself Estate Planning Can be an Expensive Mistake

 Posted on March 16,2015 in Estate Planning

Illinois residents work hard so they can enjoy the fruits of their labor once they retire and so they are able to provide for their families after they have passed. They want to ensure that even when they are no longer here, their loved ones have the financial assets to improve their quality of life. However, several costly estate planning mistakes can be made, and they can seriously impact an estate plan.

One of the most common estate planning errors is the belief that it can be done without the assistance of a qualified estate planning attorney. There are a multitude of online companies that offer estate planning forms for people to download and prepare themselves. However, the problem with these "do-it-yourself" documents is that there are specific laws, in each state, that govern estate planning. Therefore, if a person is not cognizant of the details of these laws, the simple "do-it-yourself" will or trust can end up being very costly—more costly than what an attorney would have charged to do it correctly to begin with. This is especially true when drawing up trusts, which many people utilize in order to help alleviate the tax implications that can sometimes come along with inheriting money.

Trusts do play an important role in estate planning and various financial planners advise people to not leave a large sum of money to heirs. Instead, set up trusts for them. This can be especially helpful to those who have an adult child with serious emotional or substance abuse issues. Additionally, setting up a trust which includes provisions, and appointing someone as a trustee, will prevent the funds from being spent quickly and inappropriately.

People who own their own businesses often forget to include the businesses in their estate plans. However, there are important plans that a business owner should have in place in the event of his or her death. For example, will the owner's life insurance cover the estate taxes when he or she dies?

Another issue that may need to be addressed is how a business will be divided among an owner's children. What happens when one child works at the business and the others do not? Not having a firm plan in place can end up causing your children to take a hard financial hit, and may additionally cause a family feud if all of the siblings do not agree how the business should move forward.

Finally many people do not update their estate plans when major life events happen, such as marriage, divorce or death. This is especially true when there should be a change of beneficiaries to go along with these events.

If you need to draw up new estate plan documents, or update the ones you currently have in place, please contact an experienced Wheaton estate planning attorney today to discuss what options will work best for you and your family.