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Legal-Ease: An Attorney’s Perspective: The Dangers of Online, DIY Estate Plans

By August 18, 2017August 24th, 2017No Comments

By Staci Yamashita-Iida, Esq.

Will my Will work? Can I trust my Trust? If you’ve created your Estate Plan online, these are questions you may want to ask yourself.

Nowadays, legal websites advertise do-it-yourself (DIY) wills and trusts. The appeal is easy to see: You can create your Estate Plan at a fraction of the price in comparison to visiting an experienced attorney. So, what’s the downside?

While it is fully plausible that online, DIY Estate Plans result in a trouble-free situation, that’s not always the case. If you have used a low-cost website to prepare your Estate Planning documents or are thinking of doing so in the future, I’d caution you to take the following into consideration.

Issue No. 1: Assets May Not Avoid Probate

For most people, the main purpose of creating a Revocable Living Trust is to ensure that their loved ones receive their assets with ease and without high costs, i.e., by avoiding the probate process. Unfortunately, online trusts do not always accomplish these goals. Below are two real-life stories experienced by our Probate Department.

Ken and Kate created their Living Trust through an online website. The process seemed simple enough: They filled out a questionnaire, the company generated documents for them to sign and they received said documents in the mail. The company stated that Ken and Kate would need to sign the documents before a notary public in order to be legally binding. Ken and Kate meant to go that weekend, but then life happened: Their son got sick, then they went on vacation and then it was the holidays. Eventually, they forgot that they were ever supposed to get the documents signed. Years later, Ken and Kate passed away. Their son brought in the unexecuted documents, hoping they would suffice to avoid probate. Unfortunately, they did not, and Ken and Kate’s son ended up paying thousands of dollars in legal fees in order to receive his parents’ assets.

Mary also created her Living Trust through an online website and, unlike Ken and Kate, she was able to get all documents signed and notarized before her death. However, when her son came to see our law firm after Mary had passed, he was shocked to learn that his mother’s assets still required probate. While there was a signed Quitclaim Deed that transferred the family home into the name of the trust, Mary had never recorded it with the county. Similarly, all of Mary’s bank accounts were not put into the trust, and there was no beneficiary listed. Mary had likely assumed that, by creating the trust, the assets were automatically in it. There were pages and pages of instructions of what Mary was supposed to do tucked away in the back of a binder, but understandably, she likely did not read them. While it did help that Mary had a trust in place, her son was not spared of the time and money it took to undergo the probate process.

The moral of these stories is that if you do choose to create your Estate Planning documents online, make sure that they get signed and notarized and that your assets are properly funded into your trust. If the company does allow you to speak with an attorney, utilize the opportunity by asking what specifically needs to be done in order to guarantee that probate is avoided.

Issue No. 2: Mistakes Can Have Disastrous Consequences

Mistakes happen; we are only human. Unfortunately, in the case of DIY Estate Planning, those mistakes can result in expensive, unintended results.

Take Ted, for example. He created an online Living Trust with the intention of leaving his assets to his two children. His daughter was disabled and received SSI, so he wanted her to receive the family home. That way, she would always have a place to live. Ted also wanted to be fair to his son, so he wanted the money in the savings account to go to him. Both the home and the savings account had the same approximate value. Unfortunately, because Ted simply stated he wanted his assets to be split equally between his children and did not indicate that the home and the account were to go to each child specifically, problems arose. Both children received 50 percent of the home and 50 percent of the bank account. Ted’s daughter ended up losing her benefits and, because her brother forced the sale of the home, she ended up losing a place to live as well.

Now not all situations are that dramatic. But even a simple error can have consequences that are just as devastating.

Mark ordered a DIY, fill-in-the-blank Last Will and Testament from the Internet. When filling out the beneficiary section, he stated that he wanted to leave “$100.000” to his niece May, who lived with him and served as his caregiver for the last four years of his life. Mark was very wealthy, so he had probably meant to use a comma instead of a period when writing “$100.000.” However, that simple mistake was a point of contention among the remaining beneficiaries, who claimed that May’s gift should’ve been $100 as opposed to $100,000. Thus, a seemingly insignificant typographical error ended up costing Mary $99,900.

Issue No. 3: Preparers Are Not Necessarily Lawyers

One important distinction to note is that these online document services are not law firms. Therefore, they cannot give legal advice. Document preparers have been taught to do a very specific job — fill out generic, “one size fits all” forms based on the information you give them.

While they may be skilled at this particular task, they are still not licensed attorneys. Only attorneys can lawfully provide legal advice.

Think of it this way. Let’s say you know someone who works at the front desk of a hospital and has spent the past 10 years listening to doctors consult with their patients. Would you trust this person to prescribe your medication or perform surgery on you?

Now, some websites claim that you can talk to a real live attorney should you have any questions. Companies contract these attorneys for the very reason I mentioned above: Only lawyers can give legal advice. The contracted attorneys are able to guide you through the initial process of setting up your Estate Plan. However, what if you have a question two weeks from now? Or two months? Or two years? Will the online company still permit you to speak with its attorneys for free?

It is very common for a past client to call me with a quick question. For example, I recently spoke with a woman who created her Revocable Living Trust with our firm 20 years ago. Since then, her daughter has married a man that she does not particularly like, so she wanted to make sure that her son-in-law did not receive any part of her estate. After we discussed her options, I was able to assist the client in making a decision that fit her personal goals. And the advice that was given was free of charge.

The Bottom Line

So, what’s the bottom line? Will your Will work? Can you trust your Trust? It all depends. The short answer is yes, it’s possible. But as you can see above, there are many things that can go wrong.

My mother’s favorite phrase is “You get what you pay for in life.” With legal documents, especially ones that concern your loved ones, quality shouldn’t be sacrificed for a cheap fee. So, even though you may save a few bucks now, ultimately, it is your family that will pay the price if things go wrong.

Staci Yamashita-Iida, Esq., is an Estate Planning attorney at Elder Law Services of California. She can be contacted at (310) 348-2995. The opinions expressed in this article are the author’s own and do not necessarily reflect the view of the Pacific Citizen or JACL. The information presented does not constitute legal advice and should not be treated as such. Some names and identifying details have been changed to protect the privacy of the individuals referenced in this article.