The Dangers of Do-It-Yourself Estate Planning : Part 1

In a world of do-it-yourself forms and low-cost document services, an increasing number of individuals are creating legal documents without receiving professional counsel.  Many of these individuals are using these sources to create estate planning documents, which are among the most complex legal documents available.  Estate planning documents, unless done with painstaking accuracy and a thorough knowledge of the legal ramifications (generally attained only by a professional), fail to provide the very protections and distributions for which they were originally created.  Those who have used these services may likely find their documents are incorrectly formed, are missing important legal verbiage, and may not even be accepted as legitimate documents — downfalls that could cause years of legal struggles and exorbitant fees.

Does it Cost Less to Create a DIY Estate Plan?

The primary reason that do-it-yourself legal documents are created is to save money.  DIY documents often cost less than having an attorney create professional documents for you.  However, as with all things, you get what you pay for.  When it comes to matters as important as estate planning, is it worth saving a bit of money up front to purchase documents that do not properly protect you or address your specific needs and situation?

In the long run, do-it-yourself legal documents generally end up costing far more than professional legal work due to faulty documents, taxes that could have been avoided, missed opportunities for advantageous planning, insufficient safeguards and more.

Faulty Documents Bring Faulty Results

Currently there are a number of individual and class action law suits that have been filed over faulty estate planning documents that were drawn up using do-it-yourself resources.  One of the better known cases is that of Ms. Katherine Webster who is suing LegalZoom over flawed estate planning documents.

Mr. Ferrantino, Ms. Webster’s uncle, knew he only had a few months left to live and asked Ms. Webster to help him use LegalZoom to create his estate planning documents.  Ms. Webster assisted him in creating a living trust and then went about the process of funding the trust.  Funding the trust is critical as it places the assets under the name of the trust, therefore providing the protection of the trust for those assets.  Unfortunately, the legal institutions that held Mr. Ferrantino’s funds refused to accept the LegalZoom documents as valid, therefore preventing Ms. Webster from funding the trust and leaving those assets unprotected.

Mr. Ferrantino died not long after and his trust was unfunded when he died.  Because Mr. Ferrantino’s assets were not titled under the trust, his estate must go through the expensive and lengthy process of probate.  Also, without a valid and funded trust, his estate and beneficiaries do not have the protections against creditors, debtors, ex-spouses and unnecessary taxes that would have been present if the trust had been created by an estate planning lawyer and funded appropriately.

Ms. Webster now finds herself in an ongoing legal battle over her uncle’s estate, as well as a major lawsuit with LegalZoom.  The fees from these legal battles have gone far beyond what it would have cost them to create a proper estate plan initially, which would have avoided the struggle, expense and grief Mr. Terrantino’s beneficiaries are now facing.

Check back in tomorrow for the second part of this article!

About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.  We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.