DIY Wills and Trusts
Robert's Blog
March 03 2011

There is a lot to be said for "doing it yourself," and saving a little money.  I get that.  These days, you can find templates for Wills and Trusts online with the click of a mouse.  You can purchase pre-printed forms, for a few dollars, that seem very simple to complete yourself.  The appeal of DIY Wills and Trusts is easy to see.  Who wants to pay an attorney a few hundred dollars when it all seems so easy, right?

Well... it isn't always the bargain it seems.

I have seen legal documents that individuals have prepared themselves, and some do a pretty good job.  Other times, however, things get missed... things that an attorney would have noticed.  There is also the issue of the legal advice you get when you ask an attorney for help.  Sometimes, people make poor choices because they aren't aware of the alternatives. 

Here are a few examples of instances that made me say, "I wish they had come to see me before they did this."  In many cases, it would have SAVED them money.

First, a Will that was prepared by a decedent.  It was properly prepared and executed - it is a valid Will.  However, there was a section titled "Executor's Powers" that stated that the Executor shall have the following powers which may be exercised without need for court approval.  Then there were four blank lines... with NOTHING filled in.  I would assume that she didn't know what kinds of powers an Executor should have, so it was left blank.

Thus, the estate will get an executor appointed who has no powers.  Most things that need to get done will require court approval and notice sent to all of the heirs and legatees.  The cost of administering the estate will now be more than it would have cost to have an attorney draft the Will.

Second, a Trust prepared by decedent.  It also was properly perpared and executed and is a valid Trust.  However, what the pre-printed forms did not do was explain how to properly "fund the trust."  Nothing was actually ever transferred to the trustee to hold in trust.

Thus, we have a Trust that holds no property and everything the decedent owned will have to go through the probate court to be distributed... and it most likely will not be distributed according to the decedent's wishes.  This decedent may have saved some money by setting up her own Trust, but the cost of administering the estate will much more.

The problems inherent in DIY Wills and Trusts are made worse by the fact that they do not get noticed until someone passes away... when it is too late to do anything about it.

The fees an attorney earns by creating these documents isn't for the attorney's typing skills; rather it is for the advice you get to make sure that your estate plan is properly created to carry out your wishes.  It ensures that your plan is effective - not merely that you have a valid Will or Trust, but to make sure it accomplishes the goals that drove you to create it in the first place.

And... sometimes the advice you get upfront from your visit to an attorney can keep you from making the wrong choice about the method chosen to implement your estate plan. 

For example, I recently had a client who wanted to set up an Irrevocable Trust to provide for his child's education.  After some discussion, I talked him out of a Trust.  There were several drawbacks that he had not considered.  First, an Irrevocable Trust often must obtain its own Tax ID number and file annual income tax returns.  Trusts are taxed at higher marginal brackets than individuals.  Second, there are gift tax considerations and Trusts have to be carefully drafted so that contributions can qualify for the annual gift tax exclusion.  This requires certain notices to be mailed to beneficiaries, with very specific requirements allowing the beneficiary to make withdraws from the Trust.  This adds expense to administering the Trust.

Instead of a Trust, I recommended that he look into a 529 College Savings Plan.  529 plans grow tax free, so long as the funds are withdrawn for education related expenses.  There is no need for annual tax returns, or notices mailed to beneficiaries.  And, as a bonus, they get preferential treatment for creditors. Best of all - there are no attorney's fees for NOT getting a Trust.

Estate planning is more than filling out forms and signing documents.  It's about getting the right advice and developing the best plan for you.  When it comes to plumbing, by all means, try it yourself.  If the pipe still leaks you know you need to call a plumber.  But with an estate plan, doing it yourself can be risky... there is no leaking pipe to make it obvious that you didn't do it right.  And after you pass is not the best time to learn that there was a better option.