I like a bargain just like anyone else. I hate to think I’m paying more for something than I really need to. So I am sympathetic but also concerned when clients ask me to review their DIY (Do-It-Yourself) legal documents or materials from paralegal document preparation companies.
Too often, the documents they have are not remotely adequate. For example, one estate plan had no estate tax planning. The clients had assumed that doing a living trust automatically took care of their estate taxes. (In fact, estate planning covers SIX kinds of taxes.) In another situation, the trust was not funded, which meant that the heirs would have to go through probate even with a living trust in place. You must fund a trust with assets, which means to title assets such as a house or stocks in the name of the trust. Yet another client was not aware that different rules apply when creating an estate plan for a non-US citizen. In another case, a trustee called because the DIY plan included several amendments that were in direct conflict: one gave everything to the man’s ex-wife; the second disinherited her.
So how do mistakes like this happen? Document preparation companies, like LegalZoom (recently in the headlines due to a class action suit charging unfair and deceptive business practices) suggest that you can prepare your own legal papers with the help of their services. What they fail to make clear is that they are not providing you with legal advice or counsel. They are simply providing “general information on legal issues commonly encountered.” In fact, it is ILLEGAL for them to provide legal advice without a law license. Essentially, when you use these services, you are acting as your own lawyer. Let me make a comparison: many of us will use the internet to research medical issues. But would you attempt to perform your own heart surgery? The answer, of course, is no. Yet, with documentation preparation services, many people, lured by the promise of saving money, will go ahead and use these services believing that they are in fact getting legal counsel.
Unfortunately, the money saved up front is often not nearly worth the time, trouble, and yes, money, that it will take a lawyer to untangle the mess later. With estate planning in particular, clients may feel happy to have a living trust in place, but realize too late that there is no one to turn to if they want to amend the trust, or need help with trust administration once there is a death (trust administration involves inventory of assets, changing deeds, payment of debts, notices to beneficiaries, appraisals, taxes, disclaimers, subtrust funding, etc.) These are the services and legal “legwork” that I and other estate planning lawyers provide.
So is it ever appropriate to consider a DIY estate plan? You might be surprised to learn that the answer is yes. People with a “simple” estate (assets less than $100,000) can do a will. In fact, you can do it for free using the California Bar statutory will. Or you can use NOLO which is a lot less expensive (approximately $90) than document preparation companies. Nolo offers good tutorials and explanations of legal concepts. You can also get advance health care directives from a hospital or from your doctor’s office.
Before you make a decision about whether to use a lawyer or “do-it-yourself” you might also take advantage of the California Bar’s excellent pamphlets on wills, estate planning, living trusts, and whole host of other topics. These give non-lawyers much need information, objective advice and warnings about the common pitfalls of DIY services.
Finally, you might want to find out how much it costs to work with a lawyer to do an estate plan. The number might seem high in comparison with DIY services, but considered as a percent the value of the estate or compared to probate fees, actually very reasonable. Estate plans come in a great range of prices, but price is not always an indicator of value or service. The best place to start is to get referrals from friends, family or colleagues. You can also contact the California Bar to research any attorney you may be considering hiring.
When it comes to estate plans, one-size-fits-all and DIY documents are rarely going to give you the results you really want. Be sure to read the fine print and know what you are buying. And know where you can turn if you or your heirs need help. Your peace of mind and the secure future of your loved ones are worth the added effort and expense.
E.J. provides general information about estate planning and related issues through her blogs. She welcomes comments at ej@ejhong.com. For legal advice or to discuss developing an estate plan, please call her at (650)320-7680 to make an appointment.