The Risks of DIY Revocable Living Trusts
The Dangers of DIY Revocable Living Trusts and Estate Planning Services
DIY revocable living trusts and other reduced-cost online estate planning template services might seem like a tempting alternative to working with an attorney. Unfortunately, the fact is that they give you the bare minimum and only make mistakes more likely. Not only do missteps in estate planning cost a lot to fix, but they can make an already difficult situation even harder for your loved ones if something happens to you before they can be corrected. Here’s why you should avoid DIY estate planning services and hire a lawyer from the start. In the end, it’s almost always the most stress-free option available.
What is a Revocable Living Trust?
A revocable living trust is an entity created to hold ownership of your property. They make it easier to pass on to your loved ones upon death or incapacitation. You place property into the trust by retitling it in the trust’s name rather than your own. As the name suggests, you can “revoke” or dissolve your trust at any time.
The trust’s creator is also known as its “grantor.” Grantors commonly act as the trustees of their own revocable living trusts, which means that they’re in charge of managing the trust as well. The grantor can appoint a “successor trustee” who will take over managing the trust when the grantor no longer can. This is also the individual who will distribute the trust’s assets to the beneficiaries upon the grantor’s passing. Because a revocable living trust is separate from the grantor, assets can be distributed without interference from probate courts.
Proper Estate Planning is Personalized
Our firm runs into a similar frustration with DIY business formation services – unfortunately, when online services try to provide free or low-cost alternatives to traditional estate planning, they fall far short of fulfilling the needs of their users. At best, they’re going to give you the bare minimum. A downloadable template just isn’t going to suffice for something as important as a revocable living trust.
Estate planning works best when it’s personally tailored to the needs of you and your loved ones. An attorney can take the time to get to know your situation so that they can truly optimize your trust. They can even propose strategies or point out omissions in your estate plan that would have otherwise gone unnoticed.
State Law Can Complicate Things
Each state has its own laws that apply to estate taxes, property ownership, probate, and other related issues that can be difficult to account for without years of experience and education. This is something that can absolutely ruin your plans if overlooked.
Even if you and your family have spent your entire lives in Florida, you could still run into trouble if the DIY service you use provides documents drafted under a different state’s jurisdiction. This can make managing the trust difficult, defeating the purpose of estate planning altogether. Working with a Florida attorney to set up your revocable living trust and other aspects of your estate plan is perhaps your best hope for navigating the complications of state law.
No Legal Advice
Every DIY estate planning service comes with a disclaimer stating that they can’t provide legal advice. Usually, they even suggest consulting with a local attorney before making any final decisions. This disclaimer should raise some red flags. It’s basically an admission that their services just aren’t up to par. Why would you want to trust someone who isn’t willing to back up their work? There’s no substitute for the guidance and support that you’ll receive from working with a lawyer to plan your estate and set up your revocable living trust.
You’ll Need Additional Documents
Proper estate planning is an ongoing project. As your situation changes, so too should your estate plan. A lawyer provides clients with ongoing support – this is not the case with DIY services. Placing property into your revocable living trust is also going to involve a lot of paperwork in addition to the forms needed to create the trust in the first place, such as deeds for transferring real estate. All these extra documents can be overwhelming, and each one is another opportunity for mistakes to be made.
DIY Revocable Living Trusts Can Cost You More Long-Term
The truth is that using DIY revocable living trusts can ultimately end up costing you more money and causing you more stress than had you worked with a lawyer to plan your estate from the start. Mistakes in the estate planning process are some of the most expensive missteps that you can make. You might even pay more to have an attorney fix a badly composed plan than to draft one from scratch!