Avoid Cheap “Will Mills”

We have all seen the advertisements…

Picture of an advertisement for Last Will and Testament - Do It Yourself for $19.95.

Are Will Mills Worth It If They Are Free?

Online “will mills” are undoubtedly cheap, but are they worth it even if free? 

The short answer is getting a will for $19.95 seems like a great deal, unless you need the will to protect assets while you are alive or avoid probate after you die.   

If you get sick, you will most likely discover that your $19.95 online will cost you thousands because it doesn’t protect your assets from long-term healthcare creditors and didn’t set you up to receive the maximum amount of government benefits.  

Trusts and Wills Have Multiple Purposes

Sure, they memorialize your wishes after you pass away, but they also have an essential function (some say a more critical function) while you are alive: protecting assets and qualifying you for government benefits.  

I am a lawyer and know that if you have assets and even a modest net worth or own real estate, an online do-it-yourself will is not the way to go.  

Every few days, I am asked about online wills, and below is my best advice regarding these documents.  

However, I warn you – the below is a bit “wonky” and complicated.  This is a complicated topic, and I don’t know how to write the below without being a bit wonky.  

But, if you are a Baby-Boomer (or have parents who are Baby-Boomers), this is one of the most important things you can learn about.  

What Are Trusts And Wills Used For?

Wills are legal instruments used to manage and distribute assets upon the death of an individual. 

Copy of a Last Will and Testament with a writing stylus lying on top.

A will outlines the decedent’s wishes to distribute assets and care for minor children after death.  A will that distributes assets to the wrong person (for example, from one spouse to another) can unintentionally expose those assets to healthcare creditors.  

The Conventional Uses Of A Will:

  • Distributing assets: A will specifies how assets, such as real estate, personal property, and financial accounts, should be distributed among beneficiaries after death.  
  • Naming an executor:  In Florida, the executor is called a “personal representative.”  The executor is responsible for estate administration and ensuring that the decedent’s wishes are carried out as specified in the will.
  • Designating guardians: If there are minor children, a will enables parents to appoint a guardian to care for them in the event of death.
  • Specifying funeral arrangements: Preferences for funeral arrangements are set forth in the will. 

What Is A Trust?

A trust is a legal arrangement in which one party, known as the trustee, holds and manages assets on behalf of another party or parties, called the beneficiary or beneficiaries. Trusts can be created during your lifetime (living trusts) or upon your death through your will (testamentary trusts).

Filing cabinet with green folders lined up containing important documents like Trust docs.

Trusts Are Used For Various Purposes

  • Asset protection: Trusts can protect your assets from creditors, lawsuits, or potential claims from ex-spouses or other parties. Also, trusts can be used to move assets out of the name of someone who wants to qualify for needs-based government benefits and isolate assets from healthcare creditors.  
  • Control over asset distribution: Trusts allow you to specify how and when assets will be distributed to beneficiaries. This can be particularly useful for beneficiaries who may not be financially responsible, minor children, or those with special needs.
  • Avoiding probate: Assets held in many types of trusts bypass the probate process, allowing for faster and more private distribution of assets upon death. 
  • Charitable giving: Charitable trusts can be set up to provide ongoing support to one or more charitable organizations, allowing you to create a lasting legacy.

What Is Probate?

Probate is a legal in-court process that involves the administration of a deceased person’s estate.

This process ensures that the decedent’s assets are properly identified, valued, and distributed to the rightful beneficiaries or heirs, and any outstanding debts or taxes are paid.  In Florida, a lawyer must be hired if the estate has more than $75,000 in assets (state law says you have to hire a lawyer, so you don’t have a choice).  

Small estates with limited assets may qualify for a simplified process called “Disposition of Personal Property Without Administration” or “Summary Administration,” which can be performed without a lawyer.    

Probate lawyers are expensive, and other probate-related fees are high. 

But, probate fees can be avoided with the correct trust documents. 

That is another way of saying, spending the money to hire the right lawyer and set up your estate correctly will virtually always cost less than the legal fees required to probate your estate after you die.  

Who Needs A Trust Or Will?

If you don’t have assets >$75,000, you probably don’t need a will or a trust and may not need to worry about probate. 

If you don’t have assets or own real estate (real estate can be another “can of worms”), but you have specific desires for what happens when you die (meaning burial or cremation) or who is supposed to inherit some specific item, simply write down your wishes on a piece of paper, and sign the paper in front of two witnesses.  You must ensure that the two witnesses also sign the paper after seeing you sign (and the three of you should be in the same room when everyone signs the paper).  This simple act forms a binding last will and testament.

You don’t need to pay a lawyer and don’t need to pay for a do-it-yourself online program.  Just make sure you write down your wishes clearly so that whoever finds your will after you die can understand what you wanted when you were alive.  

If you own >$75,000 in assets or real estate, you definitely need a lawyer (not just any lawyer but a healthcare asset protection lawyer) to prepare the paperwork.

Why Hire A Lawyer?

There are two reasons to have a competent lawyer prepare your trust and will. 

The first is to avoid probate costs and fees (which are far in excess of setting up your estate correctly in the first place).  

The second reason to hire a competent lawyer is to qualify for long-term healthcare benefits while alive and ensure that healthcare creditors can’t come after your assets after you are dead.  

The online do-it-yourself programs do not address healthcare asset protection and may not help you avoid probate.  In fact, using one of those programs can actually cost you hundreds of thousands of dollars just when you need cash to take care of yourself.  

You don’t want to outlive your savings if you get sick

By far, the #1 financial risk facing Baby-Boomers is paying for long-term healthcare.  

By this, I mean, home healthcare, assisted living, and nursing home care.  

At least 1/3rd of all Baby-Boomers (I am a Baby Boomer) will need long-term healthcare, and the costs are astronomical.  

For example, in Palm Beach County, home healthcare can run over $60,000 annually (approximately $30 per hour), and quality nursing homes in Southeast Florida regularly charge more than $150,000 annually (crummy ones cost more than $100,000 per year).  

Picture of a stethoscope on top of a paper reading Health, Costs, Rocket.

Given those costs, it doesn’t take long for a family (husband and wife) to burn through their life savings and outlive their financial resources.  

What Are The Alternatives?

If you hire the proper trust and estate lawyer, they can set up your estate, so you qualify for government assistance and don’t burn through your savings. 

But, a word of caution – many lawyers claim to know what they are doing, but only a tiny minority specialize in healthcare asset protection.  So, select your lawyer carefully.  I know who I trust and will share that information if you call me.  

You cannot rely upon Medicare to pay for long-term healthcare – Medicaid pays for long-term healthcare

As it turns out, Medicare does not pay for long-term healthcare (the rules are similar for VA benefits). 

But, Medicaid does.  

But, Medicaid has two problems. 

First, you must qualify for Medicaid, i.e., have few assets and little income.  

Second, Medicaid only pays for minimal care, usually in crummy facilities. 

But, with a good asset protection attorney, you don’t have to worry about either of these problems. 

A good lawyer will show you how to qualify for Medicaid without hurting your net worth and will be able to arrange for you to use your funds to supplement Medicaid payments so that you don’t end up in an inadequate facility.    

Hire The Right Lawyer!

If you hire the right lawyer, you can qualify for Medicaid, irrespective of your income or assets. 

A lawyer sitting at his desk wearing a black suite with the justice scales and a document with a pen.

Even if you have over $1 million in net worth and lots of income, you can still qualify for Medicaid (I have seen families with more than $5 million qualify for Medicaid). 

Once you qualify for Medicaid, the government will pay for most, if not all, of your long-term healthcare costs.  

And, instead of paying costs that the government will cover, you can use your resources to improve the quality of your care (which is much less than the base cost).  So, even though you may receive Medicaid benefits, you can still get 5-star care and treatment.  

What About The Online Do-It-Yourself Programs

If you have assets to protect, or own real estate, forget about the online programs.  They won’t get the job done.  

Again, my strongest advice is to hire the right lawyer.