You’re probably anxious to check estate planning off your life’s to-do list, and these forms offer a seemingly quick and inexpensive way to handle this important task.

Last week, we shared the first part of this series discussing the hidden dangers of do-it-yourself estate planning. In part two, we cover one of the greatest risks posed by DIY documents.

You may even realize such generic plans aren’t as high quality as those drafted with an attorney’s help, but with your hectic schedule, a DIY will is just way more convenient. Besides, having “something” in place is better than having nothing, right? Unfortunately, this is one case in which SOMETHING is not better than nothing.

Indeed, the false sense of security offered by DIY wills can lead you to believe you have things covered and no longer have to worry about estate planning. The reality, however, is that such generic forms could end up costing the loved ones you leave behind more money and heartache than if you’d never gotten around to doing anything at all.

In this way, DIY wills and other legal documents are among the most dangerous choices you can make for the people you love. In part one, we discussed the many ways DIY plans can fail to keep your family out of court and out of conflict, and here we’ll explain how these generic documents can leave the people you love most of all—your children—at risk. 

Hanging a shingle starts with an idea that develops into a business plan, but not without careful financial and legal considerations. Among the decisions that new business owners grapple with is whether to form a limited liability company taxed as a partnership (LLC) or a corporation making an S election (S corp).* There are similarities and differences between LLCs and S corps that business owners should understand before choosing between the two.

Similarities

-Both entities are created by filing the necessary paperwork with the state. Unlike a sole proprietorship or a general partnership, LLCs and corporations are not recognized under state law until the filing has been made. In addition to state filings required to form the corporation, a special filing on Form 2553 is required for the state-law corporation to elect S status for federal tax purposes.

-Both entities provide owners with limited liability, meaning the owner’s personal assets are protected from any business creditors’ claims.

-Assuming an LLC does not make an election to be taxed as a corporation, both LLCs and S corps are pass-through tax entities, allowing business profits and losses to flow through and be reported on the owners’ personal tax returns.

No matter what the reason, it’s important to diligently wind down a business before moving on.  

Here are five steps to take:

1. Reach consensus

If you’re a sole proprietor, then the only consensus you need is your own.  However, if you’re a partnership, limited liability company (LLC), or corporation, you’ll have to reach a consensus with your business partners on how and when to dissolve.

 Make sure that everything is in writing (this cannot be stressed enough) and follows whatever guidelines are applicable to your articles of incorporation, bylaws, and other organizational documents.

2. Seek counsel

Just as you would seek experienced counsel when starting a business, you should do the same when shutting one down.  Dissolution is a multi-tiered process. Everything must be identified, addressed, and resolved. This includes canceling licenses and permits, as well as filing legal and tax documents with courts, creditors, and government authorities.

Yet many of us put more effort into planning for our vacations than we do to prepare for a time when we may no longer earn an income.

Whether you’ve put off planning for retirement altogether or failed to create a truly comprehensive plan, you’re putting yourself at risk for a future of poverty, penny pinching, and dependence. The stakes could hardly be higher.

When preparing for your final years, it’s not enough to simply hope for the best. You should treat retirement planning as if your life depended on it—because it does. To this end, even well thought-out plans can contain fatal flaws you might not be aware of until it’s too late.

Have you committed any of the following three deadly sins of retirement planning?

1. Not having an actual plan

Even if you’ve been diligent about saving for retirement, without a detailed, goal-oriented plan, you’ll have no clear idea whether your savings strategies are working adequately or not. And such plans aren’t just about calculating a retirement savings number, funding your 401(k), and then setting things on auto-pilot.

Once you know how much you’ll need for retirement, you have to plan for exactly how you’ll accumulate that money and monitor your success. The plan should include clear-cut methods for increasing income, reducing spending, maximizing tax savings, and managing investments when and where needed.

What’s more, you should regularly review and update your asset allocation, investment performance, and savings goals to ensure you’re still on track to hit your target figure. With each new decade of your life (at least), you should adjust your savings strategies to match the specific needs of your new income level and age. The plan should also take into consideration unforeseen contingencies, such as downturns in the economy, health emergencies, layoffs, and inflation.

Failing to plan, as they say, is planning to fail.

Such forms are typically quite inexpensive. Simple Wills, for example, are often priced under $50, and you can complete and print them out in a matter of minutes.

In our uber-busy lives and DIY culture, it’s no surprise that this kind of thing might seem like a good deal. You know estate planning is important, and even though you may not be getting the highest quality plan, such documents can make you feel better for having checked this item off your life’s lengthy to-do list. But this is one case in which SOMETHING is not better than nothing, and here’s why:

A false sense of security

Creating a DIY Will online can lead you to believe that you no longer have to worry about estate planning. You got it done, right?

Except that you didn’t. In fact, you thought you “got it done” because you went online, printed a form, and had it notarized, but you didn’t bother to investigate what would actually happen with that document in place in the event of your incapacity or when you die.

In the end, what seemed like a bargain could end up costing your family more money and heartache than if you’d never gotten around to doing anything at all.

Creating a DIY Will can lead you to believe that you no longer have to worry about estate planning. In the back of your mind, you might even promise that one day you’ll revisit and update your plan with something better, but chances are, having done “something” will lead you to put this off until it’s too late.

By doing nothing, on the other hand, at least you won’t be lulled into a false sense of security, and estate planning will still be at the top of your life’s to-do list, as it should be until you handle it properly.