I recently read an article by David Hiersekorn, J.D. about on-line trusts. He notes at the end of his article that “You only get to use an estate plan once. If you screw it up, you’ll never know, but your family will.”
Okay, so I am an estate planning attorney, so I may be a bit biased. You are also probably thinking that since I am an attorney I like to make lots of money and so I want you to come to me so that I can charge you a lot more instead of letting you do things online for yourself. That is a bit cynical, but I thought it best to acknowledge it. Let me say this up front. I take pride in my work and try to charge a reasonable fee based upon the time I spend on a job, as well as my training, education and experience.
My motivation for writing this article is that I have spent an awful lot of time cleaning up after mistakes other people make regarding their estate. If all I was interested in was the money, I’d welcome these situations. It costs a lot more to correct the mistakes, than to do it right the first time.
One of the most common mistakes people make with estate planning is that they try to "do it yourself" (DIY).
I am a big fan of DIY projects. I have a lot of power tools in my garage and I love to work with wood. I have built bookshelves, desks, hung doors, wrapped windows and doorways, and a lot of other finish carpentry. Its fun; its relaxing. I call it “sawdust therapy” (ok, I stole that from Shopsmith). One year we added onto our house and instead of budgeting for a finish carpenter, I bought myself a complete Shopsmith Mark V outfit and did it all myself. But I have learned a lot of things the hard way and more importantly have learned my limits. When I had to have three custom size doors for the closets I had built under my stairs, I ended up ordering them through a friend of mine, but only after wasting a lot of oak wood and paneling trying to build them myself.
Over the past 26 years I have written thousands of wills and trusts. I have spent a lot of time reading statutes, court cases and practitioner treatises in order to learn how to craft a good will or trust. There is some specific technical knowledge required in order to get these documents right. With trusts, an even more important function is to properly fund the trust by seeing that the family assets are properly transferred into the trust. There are appellate court cases and many books written about how to solve funding mistakes in trusts in order to avoid probate!
Wills can be spoiled with improper language, as well as improper execution. A will that is not executed in the proper fashion is no good no matter how fancy the paper or the typeface. Yes, California has a “Statutory Will” you can buy, but you need to read the statute about filling in blanks and changes. Yes, you can write a will in your own handwriting, so long as you date it and sign it. Of course the words you use are important.
Trusts can be useless if the assets are not properly transferred to the trust (which we call “funding”). I have had many situations where the children of parents who did their own trust online or through some storefront "legal services" business have come to me with a trust that was never funded. Sometimes they bought the trust from a paralegal or a salesman from a “Trust Company” who told them “how to” transfer the assets, but they never actually did the work of creating the proper deeds or notifying the financial institutions of the change. In those situations, all of the parents’ assets ended up going through probate, which costs five to ten times what I charge to prepare and fund a complete trust package.
Trusts have been around for centuries. However, with the rising values of real property in California, trusts have become very popular. So, of course, there are lots of people trying to make money off the trend. You can save a few bucks with online services and other “legal document preparers”, “Trust Mills” or trust companies which often use names like “Liberty”, “American”, “National” and the like in their titles. They are usually owned and run by salesmen, not licensed attorneys. It is usually a salesman who meets with you and fills in blanks on a form or modifies canned documents. They usually also try to sell you annuities, insurance or other products, which is often where they make their real money. Although the general forms they use and modify may have been originally drafted by an attorney, and an attorney may have a nominal role, you usually never speak to one, and the documents the salesmen modify for you are often never reviewed by an attorney. In most of these situations, they do not provide the most important function; that is, funding the trust.
The California Attorney General has issued a warning about “Trust Mills”: “Living trust mills' sales agents are usually not attorneys and are not experts in estate planning. Watch out for companies that sell trusts and also try to sell annuities or other investments....”
Online services have spent millions trying to create the impression that their services are similar to those of an attorney. They put lawyers in their commercials, hire celebrities to promote them, and even tout stories of people who have successfully used their documents.
But, online services aren’t law firms. They aren’t lawyers. They can’t give legal advice. Instead, they are “document assistants” – a term that states use to define service providers who type your information into generic form documents. A document assistant enters your information into a form, whether or not it makes sense and whether or not it is a good idea. If you are stuck, they can’t help you. If you make a huge mistake, they can’t warn you because they do not have the education, training or license to do so.
It is actually a crime for them to warn you. It doesn’t matter if the guy working on your documents is an estate planning genius or a moron. And how would you know which? He hasn’t been tested. He hasn’t applied for a license to give legal advice. No one has checked his background. All he has is a business license which a dog walker can get if he can spell his name and pay a $50 fee. He may have just decided one day to stop working at the car wash and become a “document assistant”. He’s simply not allowed to give legal advice.
They can’t even promise you that the documents will work. They aren’t attorneys, which means they can’t promise a particular legal result.
Did you know that you can leave assets to a special needs child without jeopardizing government benefits by setting up a “Special Needs Trust”? Or that you can protect your child’s inheritance from frivolous lawsuits, divorce or bankruptcy by well-crafted language? A well-designed estate plan makes sure that your resources get where you want them and that they are used in the way you instruct. It’s about creating legally-enforceable provisions that do what you want done.
Online document services can’t promise any of that. They can’t promise you’ll achieve your goals. They can’t point out opportunities, and they can’t warn you about hidden hazards. Really, all they can do is save you a few bucks.
With your estate plan, if you make a bad mistake, you are not going to know it. Your children are going to find out about it after you’re gone and it is too late to change it. That is when they are going to have to spend an awful lot more money to get things done the right way.
Go to a knowledgable estate planning attorney. Most of us will offer a free consultation. I will even provide some written materials for free, without any obligation. When we meet, you can ask me anything about my experience and once we figure out together what services you need to consider, I can quote you a “not to exceed” fee. Compare fees with other lawyers (not with document services or “trust mills”) but make sure you know what you will get for the money. I usually quote fees for complete services, which include notary and recording fees for any California properties.
John L. Gorman III is an experienced, estate planning attorney with offices in Modesto, California. He has been voted “Modesto’s Favorite Lawyer” in the Modesto Bee Poll three years in a row. He can be reached at (209) 548-4000.
This article represents only the general opinions of John L. Gorman III. It is intended only for general information and not as legal advice for any particular situation. If you want legal advice, you should contact a lawyer.