Legal-Ease: What is the Downside of DIY Estate Planning?
Dear Jonathan: I am thinking about preparing my own estate planning documents, including a will, powers of attorney and a trust. A close friend of mine just went through this process and it cost her thousands of dollars and I really don’t want to spend that much money on attorney fees. I think I can figure it out by doing a little research and finding samples on the internet. I know this is your business and you probably don’t think do-it-yourself estate planning is a good idea but what is the downside of my trying to do this on my own?
Jonathan: You are correct, I do not believe do-it-yourself estate planning is a good idea. Of course, I understand the desire to save money and that is a worthy goal but do-it-yourself estate planning is not the place to cut corners to save money. Even though you will save money in attorney fees initially, it is likely you and/or your beneficiaries will end up spending more on attorney fees later to resolve issues you inadvertently created by preparing your own estate planning documents. Estate planning is complicated for attorneys who do not practice in this area, let alone a lay person. Consequently, please do not take offense when I say that it is unlikely that you will understand whether the templates you find on the internet:
- Conform to the laws of your state.
- Are appropriate for what you are trying to do.
- Contain inappropriate provisions that are contrary to what you are trying to do.
You mentioned that one of the documents you plan to prepare is a trust, which I assume is a revocable living trust. You will have no problem finding sample trust documents on the internet, but once you find a form, you will have to modify it to incorporate specific provisions that relate to your estate plan. In doing so, among other things you will need to:
- Identify yourself as the settlor and initial trustee of the trust as well as state the name of the trust.
- Identify your beneficiaries, both primary and contingent.
- Indicate whether the beneficiaries are to receive their shares outright or whether the trustee is required or has the discretion to hold their shares in trust for a period of time.
- Determine when mandatory distributions are to be made to a beneficiary if a beneficiary is not to receive his or her share outright.
- Include relevant administrative provisions and trustee powers.
Will you understand how to make these modifications and where to place them in the trust template?
Further, you will need to make sure that the trust you create complies with the laws of your state, and you will need to remove any inappropriate provisions or provisions that are inconsistent with your estate plan. Will you know how to do this?
I hope I have made it clear by my response that you should not attempt to create your own trust or any other estate planning documents including, a will, or financial and health care durable powers of attorney. Remember that one size does not fit all when it comes to estate planning. What worked for your friend, family or neighbor's estate plan will not necessarily work the same for yours.
You are much better served engaging an estate planning attorney to prepare your estate planning documents for you. Although you will incur attorney fees in doing so, you will be getting an estate plan that is tailored to your specific needs with the added bonus of you not having to worry about whether the documents you prepared were prepared properly and in conformance with your state law.
Jonathan J. David is a shareholder with Foster Swift Collins & Smith, PC and has extensive experience preparing a wide variety of lifetime and estate planning documents such as wills, trusts, durable powers of attorney for both financial and health care matters and living wills. Jonathan practices in the firm's Grand Rapids office:
Office - 1700 East Beltline, N.E., Suite 200 Grand Rapids, MI 49525
Phone - 616.726.2243
Email - jdavid@fosterswift.com
THE INFORMATION CONTAINED IN THIS ARTICLE IS NOT TO BE CONSTRUED AS LEGAL OR TAX ADVICE OR LEGAL OR TAX REPRESENTATION AND SHOULD NOT BE RELIED UPON AS SUCH. FURTHER, THE INFORMATION PROVIDED IS NOT STATE SPECIFIC AND CERTAIN LAWS AND CUSTOMARY PRACTICES WILL VARY FROM STATE TO STATE. IF LEGAL OR TAX ADVICE OR LEGAL OR TAX REPRESENTATION IS DESIRED, PLEASE CONSULT WITH AN ATTORNEY.
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