By Matthew V. Piwowar – Sadly, the probate courts, tax courts, and bankruptcy courts are full of the loved ones of individuals who thought they could do their own estate plan. Many more families who do not end up in court are stuck paying taxes or creditors, or will lose assets. The process of avoiding the courts and family turmoil after you die or when you become incompetent is, in fact, a complex legal process. The habit of trying to save money using a do it yourself trust predates the Internet by a hundred years. There is a long history of do it yourself trust failures. Unfortunately, the Internet has not decreased the failure rate, but merely increased the user’s comfort level (because everything on the Internet is true, right?).
My Technology Background
Before you assume I am anti-Internet or anti-technology, I should point out that I have a Bachelor of Science degree in Computer Science. Additionally, I own my own web development company and I teach Internet marketing to attorneys. It’s not technology that I have a problem with. I use it wherever appropriate to streamline the process and save my clients money, but not to replace legal counseling.
Do It Yourself Trust History
Prior to the Internet, there were form books and “estate kits” in book stores and office supply stores. Prior to that, individuals literally copied their parents’ or friends’ documents and reused them. I have even seen photo copies of wills and trusts where the names have been covered with white-out and new names hand written over the top. If anything has been learned by these decades of failed do it yourself trusts and estate plans; it is that forms or documents do not determine if your estate plan will work. It is the quality legal counseling that you receive when developing an estate plan and consistent maintenance and updating of an estate plan that is critical to its success.
The Internet Do It Your Self Trust – Not Do It Your Self?
Some Internet legal form companies say they have solved the consultation problem because they will refer you to an attorney. Wait, what? They advertise that you can save money with a do it yourself trust and cheap forms, and pay “no legal fees” because they are not lawyers, but then say they will refer you to an attorney? Sure, technically the company who sold you the form did not charge you legal fees, but the attorney they refer you to sure will. In some cases, the company selling the cheap do it yourself trust is really just a lawyer referral service. The cheap document is just the marketing hook to pull you into their website.
Selecting An Estate Planning Attorney
Consider this, if you are going to use an attorney, do you really want to use someone randomly selected over the phone like customer service for your computer? (Because we all know how fun that is.) How do you know if they are qualified? Where did they go to law school, how long have they practiced law? Are they even an estate planning and trust attorney, or just a general practice attorney? Will they still be in business next time you have a question or need to change your trust? More importantly, do they have a maintenance program for your trust, will they contact you when the law changes?
In short, why would you ever give up control over the selection of your estate planning attorney? Why would you use a stranger you many never meet in person? Your relationship with your estate planning attorney should be like that of your doctor or financial advisor. It should be a life long relationship with someone who you trust and confide in through the years. You should take your time selecting your attorney and ask your financial advisor, CPA, friends and family for referrals and meet with them in person before deciding to hire them.
Strangely, I have had clients tell me that after buying a $79 form kit on the Internet, they felt obligated to pay the legal fees and use the attorney that was referred to them, because they did not want to “waste” the $79 they had paid already. So, they paid thousands of dollars in legal fees. Then they entrusted the protection of themselves, their entire family, and everything they owned to a stranger over the phone. Someone who they never met in person.
Do It Yourself Trusts Are Not Customized
All families are different and your trust should be customized to meet your family’s needs and unique situation. Off-the-shelf forms, or Internet forms will not work the way you think they do. The great deception with a do it yourself trust is that you think your family is protected, but you won’t discover that it doesn’t work until you are disabled or die, and then it is too late to fix it. Convenient for the company who sold you the trust form, you won’t be around to complain when it doesn’t work.
There are hundreds of options with a trust-based estate plan, and quality estate planning attorneys spend years in law school and hundreds of hours a year reading and researching to keep track of all the options and legal ramifications of each option. Make one wrong decision, and when you die your family could spend years in court or dealing with the IRS, or lose everything to creditors. If you don’t know what all the options are, how will you know if you want to include them in your trust? If you don’t know what all the requirements are, how will you know you missed one?
Which Trust Is Right For Your Family?
Did you even buy the correct trust to start with, and do you need more than one? In some states married couples have a choice between a joint trust or two separate trusts, and there are pros and cons to each. Do you have a prenuptial or post-nuptial agreement? Did your trust funding just cancel it out? There are revocable and irrevocable trusts, asset protection trusts (Medicaid), and insurance trusts. There are specialized trusts like cottage trusts, real estate trusts, gun trusts, and pet trusts just to name a few. Do you really know which one, or more than one that you need? What do you think on-line customer service will tell you?
Keeping Your Trust Up To Date
Finally, your trust must be kept up-to-date with the law as it changes, and with the changes in your family and finances in order for it to work. Will you remember to keep it up-to-date each year? Will the do it yourself trust contact you when the law changes that makes it obsolete? It is not the paper document that makes a quality estate plan that works. It is the counseling given to the client, and the exchange of information and ideas between an experienced attorney and his client that produces an estate plan that works.
But even a perfect trust must be kept up-to-date through the years or it will no longer work the way it was originally intended at the moment it is needed. A change in tax, creditor, or disability law, or a marriage, divorce, death or birth in your family can all cause your trust to fail in its purpose. That is why it is so important to work with an attorney who provides a formal trust maintenance program for his clients. No off-the-shelf or internet trust form will keep itself up to date. You may feel good about saving a few dollars by using a do-it-yourself form, but you are fooling yourself, and your family will pay an even higher price later.
Matthew V. Piwowar is an estate planning attorney based in metro Grand Rapids, Michigan. Mr. Piwowar is a member of the State Bar of Michigan, the National Network of Estate Planning Attorneys and the Michigan Forum of Estate Planners.