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Hidden costs of do-it-yourself estate planning

On Behalf of | Aug 31, 2012 | Trust Administration |

Economic times have been hard in California. So, it would stand to reason, if there is a way to save a buck (or two) by doing something yourself, it would be a good idea. Right?

The advent of online resources and do it yourself legal forms for many counties has made many legal processes to appear more streamlined and less likely require legal assistance. So, why not skip the attorney and fill out a do-it-yourself will or trust? No doubt generic forms will save you money. Or will they?

Individuals who take over setting up their own wills, beneficiaries, executors, trusts and trustees can download or obtain copies of legal forms. The fill-in-the-blank documents appear easy to manage.

An estate planning attorney does cost more than the prefab legal documents. There are plenty of reasons for that. An experienced lawyer understands the complexity of probate laws, the subtleties associated with constantly-changing state and federal rules and is up-to-date on estate-related tax issues.

When you fill out a generic will or trust, you may have a question. How do you know if a generic form is acceptable in California? What if estate tax rules change? Instructions, advice and answers may be sparse, if available at all.

Every estate plan is different. No matter what size estate you have, you are not a generic individual. The only person to be held accountable for an error on some of the most important paperwork you’ll ever sign is you. Victims of your mistakes could be your heirs.

An article recently described the dilemma of a man who thought he was saving money in 1984 by creating a do-it-yourself living trust. The only problem was that he misdated the deed to his home, which was transferred to the trust.

Twenty-five years later, the now-elderly man wanted to borrow against the paid-off property to give his daughter a cash gift. The bank refused the loan. The incorrect date on the deed transfer blurred the legal chain of title.

The 75-year-old man contacted an estate-planning lawyer. The legal bill to straighten out the mess was $2,000, about twice what the man would have paid if he had used an attorney to draft the trust two-and-a-half decades ago.

This example is one of many that illustrates the importance and value of legal advice when it comes to estate planning. While it may seem wise to save money at the moment, the long-term cost of that frugality can be much more costly later.

Source: forbes.com, “What Could Happen If You Write Your Own Living Trust?” Deborah L. Jacobs, Aug. 16, 2012