Not surprisingly, online do-it-yourself legal services have a huge customer base, likely because they are cheaper and more convenient than using a local lawyer. Sites like LegalZoom say you can “get a will” that’s the same as what you get from the lawyer down the street.
But, unfortunately, DIY or form wills are prone to any number of problems which cause your estate to be divided incorrectly, your probate to be administered inefficiently, or your wishes to be completely ignored. These are the five most common mistakes we see in DIY or form wills:
- Ignoring the rules;
- Doing what’s “normal;”
- Failing to consider taxes;
- Naming the wrong person as executor; and
- Forgetting to update it.
There’s a Rulebook, but this Isn’t a Game
Perhaps one of the biggest risks when you create your own will is a failure to follow the rules. In order to create an effective will, you have to follow rules about how that will is signed and how your property is divided up. One simple example is a situation where you want to disinherit someone. If you aren’t specific about your intentions, a judge could interpret your intentions inaccurately. And the rulebook is twice as long when you’re married.
If Your Friends All Jumped off a Cliff…
Simply put, don’t include something in your will just because everyone else does. No two families ever have the same dynamics, so no two estate plans are ever drafted the same. Farmers need different provisions in their wills than small business owners. Parents of young children need different provisions in their will than people whose children are all adults or who never had children.
There Are Two Absolute Certainties: Death and…
Sad but true, federal and state governments are determined to get a pound of flesh any time wealth changes hands. Transfers as a result of your death are no different. No matter the size of your estate, your will should account for the potential for payment of income taxes, estate taxes, and inheritance taxes.
One situation where I see this issue come up is when a client wants to include their son-in-law or daughter-in-law in their will. Under Iowa law, your kids’ spouses will pay inheritance taxes if they receive property directly from your estate, but you can avoid this problem with proper planning.
Who Ties up the Loose Ends?
This mistake takes many forms, but it’s the second most common (see number five) mistake in the list. Because the executor is responsible for managing the estate of the deceased, every executor must pay attention to detail. Many people appoint co-executors which makes this difficult. Others appoint the oldest child because they think they’re supposed to, even if that child is not financially savvy or maybe uncomfortable with the legal/technical requirements of the role.
Over the last several months, we’ve written blog posts about the role of the executor and what happens to your debts after you pass away. Each of those posts highlights just a couple of the many different parts of what it means to be an executor, and our Introduction to Probate (downloadable here) gives a high level view of the role. Suffice it to say that acting as executor of an estate can be difficult and complicated, so the choice of who will fill the role is critical!
Set It and Forget It
It’s easy to have your will prepared, put it in a drawer or safe, and forget about it. So easy, that this is the most common mistake people make with their wills.
Your will should reflect your family’s needs. Those needs are directly related to your family’s circumstances at any given time. You may have noticed that your and your kids’ financial and physical circumstances are always changing. That means your will needs to change too!
A good rule of thumb is to review your will every two-three years to make sure it meets your family’s current needs. You should also have it reviewed after major life events – a wedding, the birth of a child or grandchild, etc.
Each of these five common mistakes people make in their wills can cause significant problems. From major time delays to miscommunication, disinherited beneficiaries to unintended heirs – your will must be carefully constructed to ensure it meets your family’s needs and achieves your intended outcomes. To get started creating your will – and avoiding these mistakes – contact our office at (712) 737-3885 and schedule a Painless Planning consultation.
