Outside the Box: Should I do an online will? Avoid these pitfalls

United States

Drawing up the simplest of wills can often cost over $ 500, depending on where you live and the legal counsel you chose. More complicated ones can cost several thousand dollars.

Doing a simple will online saves you money — it can even be free. But before you jump on board and make the low-cost purchase, ask yourself the following:

1. Is your family situation simple? Online wills typically are good for a single person with few assets or a couple without children. More loved ones may mean more complications. Estranged siblings, second marriages or young children requires specific language to counteract possible disagreements.

2. Are your financial affairs in order? If your assets are incorrectly titled or if your net worth is taxable at death in your state of residence, your situation may be too complicated for this approach. If your estate is taxable, more personalized documents can be designed to save taxes, leaving more money for your heirs.

3. Does your trusted person have the knowledge and skills to implement the directions in the will? Executor is not a simple job. Even with a simple will, there are details to handle and accounting to record.

If you answered yes to these questions, an online service would cover your basic needs in not only a cost-effective but also efficient way.

Where to start? Many of these low-cost services have been around for years, like Nolo and Legal Zoom. Find one that has good ratings from customers and the Better Business Bureau.

Most come with clear, understandable directions. They are written by a national team of lawyers including those qualified to write wills in your state. Many even have lawyers on staff for questions. Some offer monthly subscription services, which most people do not need, adding an unnecessary expense.

The hardest part for many is facing their own death and answering essential questions. The following are stumbling points:

  • Who do I leave my assets to?
  • Who will be my executor?
  • Is there some personal property I want to go to a specific person?
  • What do I do want done with my online presence: social media, email accounts and websites?

Because of this challenge, some put it off or slow down the process — or stop all together. Yet I continue to hear from people how good they feel once they do have a will done. They can carry on with their life and know their family and friends will have a plan in place.

Don’t forget these crucial steps

As efficient as it may seem to do your will online, don’t be misled by some sites that promise wills in less than 10 minutes. You may be able to fill in the information quickly, but there are more steps. Downloading the documents, filling them in but never having them signed defeats the purpose.

Before you sign your will, review it a final time with the instructions in hand. You do not want to create a mistake where you leave out a child’s name or vaguely say “all my children.” Courts follow instructions and want details.

Then have your will signed properly according to state law. Depending on your state of residence, this probably means notarized with witnesses. Give yourself a deadline. People who buy these products and then leave them sitting in a corner virtually or in their home office are wasting money.

Finally, let your loved ones know where to find the will. If you have an old will, be sure to destroy it to prevent confusion.

Congratulations, you are now one of just 42% of U.S. adults with a will.

Two cautions: If you intend to leave out one of your children for whatever reason, see a lawyer, as you need specific language to avoid a legal challenge. The same applies if you own property in another state. Even if it is in joint ownership, estate tax implications vary as do state laws. Owning property out of state is perfectly fine, but the added step of distributing property there may mean you need something more than a simple will from your state for estate purposes.

As a single homeowner, the first will I did was filled out with an inexpensive online program. Before I signed it, I made an appointment with a local lawyer, not a big firm. I owned my home and wanted my executor to have a trusted resource. Because I had taken the time to thoughtfully complete the online document, the lawyer suggested only minor changes around wording to be more personalized. We did not need as much time together, and he was clear what I wanted.

The next time we met was to sign the documents. He even filed a copy with the court for me, which is an option in many states like Vermont. Now I knew the lawyer, myself, my executor and the court would have the information if something happened. And best of all, I saved his hourly billing because he did not draw up a whole will from scratch.

What else?

Remember the will is only one piece of good estate planning. You need to have a financial power of attorney and health care directive legally in place, too. This are available online. Each state has a standard form for health-care directives. Power of attorney forms are often free online from the will services.

In addition to signing all the legal documents, you should confirm the beneficiaries on your retirement accounts as they will receive your retirement funds, no matter what your will says. These beneficiaries can be changed at any time and supersede what your will says. Investment and bank accounts can also be “paid on death” or “transferred on death,” avoiding the will and probate process through paperwork at your financial institution.

Opinion: How to make sure your spouse gets your retirement savings when you die

A will is still needed for personal property and whatever may have slipped through the cracks in your planning.

Away from your will, organize a list or easily accessible file with all the information someone would have to know if you died, from who to contact to where your money is. List the correct name on each account , what debts you have and who your employer is. Other pieces of information you may include are who to contact, passwords and safe-deposit information.

Your funeral wishes don’t belong in a will. This document is often not found until after your memorial service.

Never put your estate plan on autopilot, thinking once done, you are set for life. Review it every five years. Also, be aware of these triggers:

  1. As your assets grow, your estate plan should as well. Your net worth impacts your taxable estate and perhaps your planning for distributing assets.
  2. Changes in  your personal life whether new marriage or a divorce means your will needs to be updated.
  3. A move to a new state where you are become a resident means it is time to create a new will for that state. Wills are particular to the state.
  4. Changes in federal estate laws are reason to review your will, as are changes in state law. For example, some current federal estate laws expire in 2026.

Cost-effective may not mean cost-efficient if you lose track of the will or do not keep it updated. Because problems or issues are not discovered until after death, the outcome is costs, delays and strain on your heirs who are already grieving.

Read: Skip these ‘free’ sources of financial advice — they will cost you dearly

I have heard sad stories from relatives who meant well and wanted to save money.

One divorced man’s disabled son lost his government benefits because his father left him a chunk of money at death. A lawyer specializing in special needs trusts would have been the way to go.

A woman hired a lawyer to draw up the will but requested the lawyer send her the document and she would get it signed, rather than pay to do it in the lawyer’s office. The woman signed and got it notarized but failed to have the two witnesses as her state law required. Her estate got tied up in probate, costing her family money and undue stress.

So know yourself. Are you the type of person who needs to be nudged when it comes to details or considering your own death? The human interaction may give you the impetuous to make this happen.

Online, with a lawyer or with a combination is a way to thoughtfully care for your heirs. Whatever way you chose, know that you will be making their lives easier when they are grieving.

CD Moriarty, CFP, is a columnist for MarketWatch and a personal-finance speaker, writer and coach. She blogs at MoneyPeace. Email your questions to MsMoneyPeaceQuestions@MoneyPeace.com

Now read: Avoid these 3 estate-planning mistakes and make probate cheaper and easier for your loved ones

Plus: Re-creating a loved one’s financial life is hard — 5 steps to follow after a death in the family