In this economy, smart consumers are tackling projects they used to turn to pros to handle in an effort to scrimp and save. Can you do that with estate planning? Experts generally agree that there are a few aspects of estate planning you can take on yourself. But trying to handle others on your own would be supremely unwise.
What you can doMany experts agree that you can handle a few basic forms yourself. "An advanced health care directive, also called a health care proxy, designates who your health care agent -- or who can affect your medical decisions -- will be if you become incapacitated," says Terri Hilliard Olson, an attorney at Terri Hilliard PC in Westlake Village and Burbank, Calif. "You can get that online, but it's essential to update it occasionally because it may expire."
Another document you can execute easily is a Health Insurance Portability and Accountability Act, or HIPAA, release. "It's really essential so that your family members can speak to your physician about your medical condition without liability to your physician," says Hilliard. "You can also do that through an online form."
Though a durable power of attorney -- which allows others to control your finances -- may seem like another simple form you can execute yourself, experts have reservations about executing one without legal assistance. Typically, a durable power of attorney "springs" into effect when a specified event triggers it. That event could be your incapacitation, or it could simply be your unavailability for a scheduled real estate closing.
"Clients can inadvertently grant unlimited access to their finances because if a durable power of attorney isn't filled out properly, it's not springing," says Hilliard. "Where people also need counsel is determining the proper person to act for them. What attributes does that person need to properly act on your behalf? Just because people are relatives doesn't mean they're the best people to do that."
What may be risky to handle yourselfMany companies sell form wills and trusts you can download and execute yourself. Creating a will on your own is appropriate only in limited circumstances, and doing the same for a trust is truly risky.
"Online estate planning documents probably work very well if you want to leave your assets outright to one or two people, and those people have virtually no legal or financial problems," says Gary Altman, an attorney and Certified Financial Planner at Altman & Associates in Rockville, Md. Before you do estate planning on your own, Altman suggests asking yourself these questions:
- How big is my estate?
- Who am I leaving it to, and are they minors, or do they have issues like angry creditors I need to plan around?
- How am I leaving it to them, such as through a will or a trust?