Online estate planning pros and cons

A quick online search for "estate planning" yields plenty of options for digital wills and legal documents. From powers of attorney to letters of instruction, online estate planning documents are easily accessible.

There's no doubt that it's convenient. But is online estate planning the best way to go? As with most personal finance questions, the answer is, it depends.

Read on for the pros and cons so you can make a decision that makes sense for you.

What's estate planning?

Estate planning is a two-part process. First, it's the plans a person makes while they're still alive. Second, it's the actions their family members take after their death. Effective estate planning ensures a person's wishes are legally binding and easy to understand when they die.

When estate planning runs on all cylinders, there's seamless coordination between your goals, applicable laws, and the people or institutions involved. Sometimes it's easier to understand why good estate planning is important by looking at instances when the process fails.

For example: Let's say Terri wants to leave everything equally to her children from a previous marriage and updates her will accordingly. But she forgot to update her life insurance policy that still names her ex-spouse as the beneficiary. Consider these Estate planning documents:

• Last will and testament
• Health care power of attorney
• Durable financial power of attorney
• Living will, or directive to physicians
• Letter of instruction

The following parties may be involved in the settlement of your estate:

• Internal Revenue Service. Even though there may not be a federal or state tax on your estate, you'll likely need to file various tax returns for the deceased and their estate, depending on the circumstances.
• Family loved ones and other heirs, such as charitable institutions. Family dynamics and charitable bequests can sometimes complicate the estate settlement process.
• Individual financial institutions. Many account types, such as bank accounts, investments, life insurance, annuities and employer retirement plans or pensions, are distributed based on the account's legal ownership structure, as well as its beneficiaries. Financial institutions may have their own process and requirements for completing estate distributions.

All this matters because, while you may have completed a will, if your family faces multiple roadblocks in settling your estate upon your death, your wishes may not come to fruition.

The difference between online estate planning and online tax filing

Many people assume that because they file their taxes online, they can also complete their estate planning online. This isn't necessarily true.

While estate planning and tax filing both involve legal documents, the two processes are quite different. There are far more components and parties to consider with online estate planning versus tax filing. For example, state-specific laws governing wills and trusts can make the estate planning process confusing.

In addition, you may be able to correct your tax filing errors, whereas you only get one chance for proper estate planning.

Pros of online estate planning

Online estate planning can be beneficial for the following reasons.

• It's convenient. You can complete legal documents from the comfort of your own home. This can be helpful, especially if you don't have easy access to qualified legal advice.
• Upfront estate planning costs may be lower with online estate planning services than they would be with traditional estate planning methods.
• You can easily access your documents. Digital estate planning documents are stored online, allowing you and your loved ones to review or update as needed over time.
• Learn as you go. Some online estate planning services offer supplemental educational material, such as articles and videos, on a wide variety of estate planning topics.
• Chat for help. If you have specific questions regarding your estate planning, online services often provide a chat feature, so you can communicate in real time.

Cons of online estate planning

While convenient, online estate planning may not be the right choice for you. Here are a few reasons why you could be better off seeking the help of a professional.

• Estate planning is often complex. Online tools may not provide the same level of expertise, guidance, customer service and support that you might receive when working with an estate planning professional.
• Opportunities for personalization are limited. You have unique estate planning needs and goals, and online estate planning may not provide the same level of personalization as working with an estate planning attorney. Be aware of the importance of certain documents that should be in place during or before deployment if you're active military.
• Technology can be challenging. Online estate planning may not be practical for everyone, especially those uncomfortable with online technology or without internet access.
• Data breaches are a concern. Online estate planning services may profess to offer privacy and security, but users should independently confirm appropriate data security measures are in place. One standard that serves to demonstrate that a company has adequate controls in place governing information security, and that involves an independent audit by a third-party CPA, is known as SOC 2.^{See note1}
• Total estate planning costs may be higher. Upfront costs may be cheaper with online estate planning but consider all the other factors involved in settling an estate — with or without probate. When someone dies, their loved ones often spend time and money to pay for the help from attorneys or tax advisors with legal questions.

When online estate planning makes sense

Online estate planning could make sense for you if your estate planning needs are simple. For example, maybe you have a smaller estate with few complex needs, or you're single — or married and never divorced.

You may also consider it when:

• Estate planning feels cost prohibitive. If you haven't done any estate planning because it seems too expensive to hire an attorney for assistance, online estate planning can be a good place to start.
• Your location prevents you from accessing qualified legal counsel. Let's face it, not all of us live in an area filled with qualified estate planning attorneys. If that's the case, choosing to work with an online provider can be an appropriate alternative.

Ready to get started?

If you've decided to pursue online estate planning, start by visiting Trust&Will.

Active-duty service members and their dependents, as well as retired or disabled service members and their dependents, may be eligible to take advantage of no-cost legal assistance. Commonly known as JAG, this service can include estate planning.

To find a general legal services provider within CONUS, visit the U.S. Armed Forces Legal Assistance Locator.^{See note1}

Still undecided? For more education or to find a local attorney who specializes in estate planning visit the American College of Trust and Estate Counsel.^{See note1}