WILLS, TRUSTS AND ESTATES NEWSLETTER
AUGUST 8, 2017
So You Think You Can do Your Own Estate Planning or Use an Attorney who Dabbles?  

The Internet has brought about a fantastic explosion of previously closely held information and do-it-yourself options.  You can form your own business, learn how to repair your car, find the best price, and much more thanks to the Internet.  And of course, you can create your own estate planning documents for less than $100 in many cases online.

It is true that you could go online and create your own trust or will without an attorney.  And if your assets pass accordingly to your loved ones, you will have saved a couple thousand dollars and taken care of your loved ones.  The problem is that when things go wrong with the "DIY" option, the cost of errors is several times that of a custom estate plan.  Especially because most of the time the problem with the estate planning documents is discovered after the person who created the documents is gone.  Remember, everyone who did their own online estate plan or consulted with a non-attorney thought their situation was simple and straightforward.  I would be willing to bet dollars to donuts that nobody ever thought, "I could make a mistake here that would cost my loved ones tens of thousands of dollars to fix or cause my assets to go to the wrong people.  But I'm going to go ahead with this online trust software anyway."  Below are some real life examples of cases I handled where the trust creator either went the DIY route or utilized an attorney who is not a dedicated estate planning lawyer.

The "Simple" Trust Amendment

Early in my solo practice I got a call from a beneficiary who was shocked to find out that her uncle had amended his trust, leaving her far less than he had originally left her.  At first my client suspected forgery, but a handwriting expert confirmed that the uncle most likely did sign the amendment.  There was another problem, though.  While the uncle presumably thought he was being clear, it was not clear from the amendment whether my client was entitled to 1/3 of the trust estate or 1/9 of the trust estate.  On top of that, the amendment purported to give away 200% of the man's estate!

My client's kind friend fronted the attorney's fees for my client.  At the end of the process my client got a distribution of about $100,000.  From that money she was to repay her friend.  So my client called to ask how much all of the bills combined added up to.  For the amount of money she paid me, my client's uncle could have paid for 4 full price custom estate plans.  Add to that the fees for opposing counsel and the strained family relationship and you have one costly DIY trust amendment!

My Daughter is a Top Notch Lawyer.


Even a former Chief Justice of the U.S. Supreme Court botched his will!  Why?  Because he's not an estate planning lawyer!  Just as you should not consult with Gadi Zohar about your patent prosecution, you should not consult your patent attorney relative (I'm thinking of at least 2 real life examples off the top of my head) about your living trust.  I have personally rescued a number of severely flawed estate plans created by relatives or friends who did estate planning as a "favor" to a loved one.  Luckily in the cases I'm thinking of here, the people came to me while the trust creator was still alive and could make corrections without the need for judicial intervention.

But the Lawyer went to an Ivy League Law School! 

Several years ago I got a call on a trust issue from a member of a close-knit family.  I reviewed the trust instrument ahead of meeting with the family.  When I walked in with the trust document in my hand I said, "You did this yourself, didn't you?"  I was shocked to find out that they had gone to a lawyer.  What's more, the lawyer went to an Ivy League law school and had literally been licensed to practice law since I was in the 5th grade.  But he was not an estate planning lawyer.  He was a general practitioner.  And from the language in his documents I could see that he had not updated his terms since the 1980s.

One beneficiary of the trust was a person who had special needs.  And the person who created the trust was living but she lacked capacity due to dementia.  Therefore I had to go to court to alter the trust so that a special needs trust would be set up for the beneficiary who needed one.  Not only did the judge agree with me that this was an appropriate change, but the judge also agreed that one of the terms the lawyer wrote into the trust was completely unenforceable because it would require the trustee to violate the California Constitution.  The financial cost of fixing this problem was about 5 or 6 times the cost of a typical foundational estate plan.

I've never even Heard of a Foreign Trust

A former client of mine called for what she thought was a simple matter.  She and her husband had used an online service to create their own living trust.  My client's husband was a U.S. Citizen, but she was neither a U.S. Citizen nor a permanent resident alien.  Due to the type of trust they set up, this resulted in part of the trust being irrevocable and my client as the trustee of that irrevocable trust.  When a trustee is not a U.S. Citizen or permanent resident alien, the trust is considered a "foreign trust" by the IRS.  Foreign trusts have onerous reporting and tax withholding requirements.  Even the beneficiaries of a foreign trust are burdened because they must report distributions to the IRS.

The only option was to get a court order authorizing my client to revise the trust.  Like the examples above, my client paid many times the cost of a custom estate plan to fix an issue she never even knew about.

The Bottom Line

The bottom line issue here is risk.  How much are you willing to risk in order to save a couple of thousand dollars on the front end?  Because I am sure that for every example above where problems arose, there are several examples of people who saved money and their loved ones experienced no problems when the estate plan was implemented.

Chances are if you care enough to create a living trust, there is someone you care about who would be the beneficiary of such a trust.  On the one hand you risk spending a couple thousand dollars more than you needed to versus costing your loved ones many thousands of dollars and added stress after you are gone.  Or even, as I have seen first hand, your true wishes not being honored because you did not express them accurately in writing. 

Using an experienced estate planning lawyer to create your documents is a bargain when you consider the peace of mind to you and savings to your loved ones after you are gone.  

SIDE BAR

When I wrote this article, I of course knew of the famous example of Chief Justice Warren Berger referenced above.  How ironic that the article was broken up by one advertisement for a "free living trust" and two advertisements for a "last will and testament" from popular online DIY services. 
Gadi Zohar Intro Video
Gadi Zohar Intro Video