Risks of D.I.Y. (Doing It Yourself) in Estate Planning

D.I.Y. is risky

The landscape of legal affairs is constantly changing and evolving. Laws are newly enacted, updated or even stricken from the books. Courts interpret those same laws in different ways and higher courts of appeal overturn or reinterpret them in other ways. Regulatory structures also change on a regular basis. Professional legal counsel (lawyers) are trained to research, interpret and navigate these treacherous waters. The risk of “Do It Yourself” (DIY) is that you substitute your own knowledge and unverified information sources for the lawyer’s education, training and experience…as well as the verified legal sources or databases that are available to legal professionals.

Risks of Self-Representation in Legal Matters

There is a rather famous quote (or versions thereof) that has been severally attributed to Benjamin Franklin, Abraham Lincoln and originally to William De Britaine from his 1682 book, “Humane Prudence” where he states, “…Take the Advice of some Prudent Friend; for he who will be his own Counsellour, shall be sure to have a Fool for his Client.”

The principle is clear. It’s not wise to represent yourself in legal matters. Even lawyers will hire another lawyer to represent them. The key to this principle is that being human beings makes it difficult for us to approach a problem with sufficient impartiality if it directly impacts us or our reputation, family, etc. Also, all lawyers are not experts in every area of practice in the law. One might be a stellar criminal defense attorney but know remarkably little about corporate or estate planning law.

If you represent yourself, you are actually circumventing a key element of our legal system. A representative can say and do things that a party cannot say or do without seeming to be self-serving. Similarly, a party can testify about events which they have experienced, but a representative cannot. It would be imprudent to cut yourself off from the benefits of having an attorney and characterize every single statement you make into an evidentiary admission…as if you were on the stand at every moment of the hearing or trial.

Similarly, a legal representative’s education, training and experience is very difficult to replicate without the same massive investment in time, money and effort. The average lawyer has received a four year bachelor's degree with a high GPA, performed well on entrance or national exams like the LSAT, graduated from an accredited law school (another three years) and finally passed the bar exam just to become a lawyer. Then additional training ensues as they keep their bar license updated with ongoing legal education requirements. Add to this the lawyer’s experience in a particular area of practice, the hundreds if not thousands of hours researching the law, writing, analyzing and defending their positions or documents…and then propose to substitute your judgment (as bolstered by unreliable or outdated sources or blurbs obtained online) for theirs? The risk of making a mistake or many mistakes is inordinately high.

Alternative and Online Estate Planning

The first principle to understand is that estate planning among lawyers is carefully regulated. Being a professional means that the result of problematic documents is disciplinary action by the lawyer’s Bar and potential malpractice lawsuits. Online sources specifically waive any sort of culpability and generally are not able to be sued should their documents have a poor result. Remember that principle as the following alternatives are discussed.

Many non-legal professionals offer estate planning. These may include financial advisors, estate planning companies that are not law firms, and even accounting practitioners. Many state Bar organizations take a dim view of practicing law without a license, but regulation and prosecution of violators has been spotty.

Generally speaking, financial advisors are required to pass certain tests which then allow them to offer certain types of more and more sophisticated investment or insurance products. (I.E. Series 6, 7, 63, 65, 66, etc.) Their training in estate planning is often non-existent or minimal at best, and very few complete courses such as the AICPA & CIMA or NICEP designations. Often, their firms will offer “free” or discounted planning through an online source or program which is not “accredited” or supervised by an estate planning professional.

Estate planning companies very rarely have an attorney, certified public accountant, etc., who are AEP certified. To become an Accredited Estate Planner requires the individual planner to be an attorney, CPA, trust officer or financial planner with CLU, ChFC or CFP designations. The amount of expertise, educational training and experience varies widely and the quality of the planning may subsequently suffer. Additionally, estate planning companies often run afoul of Bar regulations as a part of estate planning is offering legal advice which a non-licensed attorney is restricted from offering. When legal advice is given by a non-attorney, that individual or business entity is violating the law. (That’s why you find caveats and disclaimers throughout non-attorney documents and programs.)

Similarly, a Certified Public Accountant or Accounting Firm may offer estate planning. In my experience, the planning for tax purposes is generally of a good quality. The other elements of an estate plan, however, may be missing or poorly done. CPAs are generally not aware of issues that may arise during trust or will administration and do not prepare the documents accordingly. Their focus is on tax planning, and that is where their documents are generally solid. Asset protection, generational direction or inheritance, guardianship, conservatorship, powers of attorney, healthcare documents, and many other areas may be neglected or be missing entirely.

Online estate planning programs are generally inexpensive, and that is their key value consideration. They are usually not very sophisticated for a few important reasons. First, an online last will and testament or revocable living trust doesn’t have an experienced human being asking the right questions so that the estate planning is properly customized to fit that individual's needs. Secondly, online programs must serve a large population coming from multiple jurisdictions, so usually state-specific drafting on a high level is not possible. Thirdly, customization requires an in depth understanding of the individual’s needs, condition and desires as well as a complex understanding of jurisdictional issues, options, competing regulatory and tax schemes and their interplay with various strategies and methodologies. This sort of planning requires knowledge and experience coupled with creativity that is limited by what is possible under the law. AI and point & click programs simply cannot provide such a service at this time and maybe not even into the future.

Lastly, proper funding guidance and action is a primary failure point for virtually all online sources, many non-legal providers and possibly even some licensed attorneys or firms. “Funding” refers to the process of transferring assets (Real Property, Business Interests, Investment Accounts, Banking Accounts, Life Insurance, Notes, Contracts, etc.) to a trust instrument. Please take careful note, if you do not properly fund your trust instrument, it will be of little use to you or your heirs when the time comes.

In conclusion, DIY is certainly less expensive initially than the full estate planning process with a licensed and experienced attorney. The risk, however, is that your estate plan as sourced from an online or alternative option will not “do the job” or not do the whole job. A poorly drafted last will and testament or revocable living trust plan can cause substantial problems that will inevitably cost more to rectify than getting the estate plan done by an attorney would have cost. I will provide two examples to illustrate my point.

First example: I had a very nice couple come into my office to have their online trust reviewed. They were proud of the fact that it had cost them only a fraction of what it would have cost to hire an attorney…but they wanted me to check it over.  As I was reading it, I started to chuckle a little bit. When they asked me what was so funny, I explained that their trust was set up to disinherit the surviving spouse… so that whoever lived longer than the other would get nothing and the kids would get everything… Their eyes were wide as I showed them that provision. (The lesson to take from this is that if you don’t know what that “flyer button” does, then don’t click it.) I noted that their trust was not properly executed under the law of their jurisdiction, and their trust was also “unfunded” and therefore largely useless. They subsequently hired me to draft, execute and fund their estate plan.

Second example: A confused widower came to my office because he had been told that there were issues with his wife’s last will and testament. I reviewed the will and immediately saw the problem. Her will (and his too) required a 50% share to be irrevocably transferred to a testamentary trust which was to be held for their heirs. No income was to come to the survivor, and a probate would be required as well the drafting and funding of the testamentary trust. They had paid rather handsomely for this will package and now he would have to pay for probate, the creation and funding of a totally unnecessary and problematic testamentary trust which was not at all what they had wanted for each other. The probate, trust creation, etc., would have run administrative costs up through the roof. I was able to intervene, and with the assistance of the widower’s children we set aside the estate plan with a TEDRA, transferred the assets to the widower without a probate and subsequently created an estate plan that actually did what needed to be done.

I encourage you to set aside your DIY instincts and consult with an expert who can actually navigate these very risky waters.

Curry Andrews, Attorney at Law