The pitfalls of do it yourself estate planning.

          Some
people choose to prepare their own estate planning documents using “do it
yourself” estate planning programs in order to avoid attorney fees.  Having administered some wills and trusts that
were so drafted by now deceased laypersons I can provide some observations
regarding possible pitfalls. 

          Having
a trust that is not properly funded is counterproductive.  One do-it-yourself trust done by a father was
not funded with his real properties.  The
father failed to re-title to his real property to himself as trustee.  The combined value of his holdings exceeded
the $150,000 probate threshold and would have triggered a probate.  Fortunately, a less expensive petition was
available because these real properties were listed as pledged to the trust on
a schedule of initial trust assets.
Nonetheless correcting this single mistake cost more than what the
father would have paid an attorney to draft and fund a living trust.

          Having
a trust without a pour over will may also be counterproductive.  Having a trust does not mean that you don’t
still need a will.  One’s day to day
checking account, vehicles and perhaps some miscellaneous items are typically
not transferred to the trust until death pursuant to a pour over will naming
the trustee as beneficiary.  Provided the
combined gross value of these non trust assets is under $150,000, then an
affidavit, death certificates and a 40 days wait from the decedent’s death is
sufficient.  Without a will these
non-trust assets will skip the trust and go to one’s heirs, which may or may
not be equivalent to who receives what under the living trust.

          For
example, a mother’s do-it-herself trust was unaccompanied by a pour over
will.  The trust left 50% to the mother’s
daughter and 50% to her daughter in law (i.e., the wife of the mother’s
predeceased son).  But the mother did not
execute any will.  So the mother’s bank
accounts, unlike her trust estate, instead went to the mothers’ heirs – which
included her surviving grandson (from the deceased son) and daughter – to the
exclusion of the mother’s daughter in law.

Many people do not
understand how to properly name primary and alternative death beneficiaries to
retirement accounts.  Do it yourself
estate planners can sometimes seriously botch up the death beneficiary form
with unintended results.  With large monetary
values inside retirement plans getting the death beneficiary form wrong can
result in someone other than the intended beneficiary receiving some or all
proceeds.  For example a deceased
father’s IRA that was intended to go to his surviving daughter went instead to
his surviving second wife due to a flawed death beneficiary form.

Do it yourself estate
planning tools are designed primarily for basic probate and conservatorship
avoidance.  They are not intended to be
used when more complicated estate planning goals are involved, such protecting the
decedent’s estate from Medi-Cal recovery, disinheriting any of the decedent’s
heirs, giving gifts to care givers or protecting inheritances for any
beneficiaries who require on-going trusts (e.g., special needs trusts, asset
protection trusts and support trusts). 

Some clients, who tried
to do their own estate plans before meeting me, have told me that their
attempting to prepare their own estate plan was both educational and helped
them to be prepared to when they met with me as their drafting Lake County wills attorney.  Nevertheless, they realized that they were
uncomfortable proceeding on their own and wanted an attorney, and more peace of
mind.

Finally, anyone considering
using a “do it yourself” estate plan should carefully consider whether they
fully understand what they are doing, whether their family’s needs are
adequately met by the plan, and whether they will properly follow through (or
procrastinate).  What is your peace of
mind worth?