Do It Yourself Wills & Trusts

Forbes magazine had a recent article about Legal Zoom, an internet company that “targets the high-volume, low-cost business of providing basic consumer and business documents.”  According to the article, the legal establishment is up in arms about it.

This situation reminds me of an incident when I was just starting out as a lawyer (the mid 70’s if you must know).  Someone called into the office wanting a Will and asking how much it would cost.  I’ve forgotten what the charge was way back when, but it was probably somewhere around $50-70.  The consumer was shocked that the price was so high and asked if there were any lower cost alternatives.  The secretary taking the call inquired of the attorney I was working for what she should tell the consumer.  That attorney said he wasn’t going to tell the consumer about the Will that he could get at the office supply store for $1 as he wasn’t going to tell him about “his competition.”

For years I have thought about that and the ridiculousness of that attorney’s position.   A few years after the incident, it dawned on me—-if the office supply pre-printed Will was that lawyer’s competition than his expensive law school education really wasn’t worth very much.  And that is still my opinion of lawyers who believe that that is their competition.

Of course, today, there are all sorts of alternatives:  the $1 Will at the office supply store is still there (probably slightly more expensive now), but you won’t find it at Office Depot or Staples; it will be at the local La Jolla (or whatever town you live in) Office Supply, the Wills on the Internet for free or for a fee, or, in California, the Statutory Will available on the State Bar Web site.

The Forbes article noted above also includes some comments from other people regarding online legal services.  Unfortunately, I don’t see where those comments are available online.  Nevertheless, I will share with you two stories that illustrate the point.

A prospective client of mine brought in a Trust that she had had completed by another lawyer a few years earlier.  As I reviewed it, it looked strangely familiar:  the wording, the order, layout, everything.  Then I realized, this lawyer had copied one of my Trusts and made a few nominal changes, such as the woman’s name, etc.  Well, here was the problem.  My version had had a particular clause in it to create a specific tax effect.  According to tax law, in order to preserve the effect that I wanted, it could allow the creator of the trust (the woman) to withdraw up to 5% of the principal of the trust per year.  The 5% was a maximum according to tax law. This lawyer apparently thought if 5% was good he was going to improve on it and make it 20%.  Obviously, he was unaware of the tax law that limited it to 5% and, thereby, sacrificed this woman’s tax benefit.  If a lawyer who is inexperienced in estate planning can screw it up that badly, how badly can a layman screw it up?  See the next paragraph for the answer!

Let me give you one more story about a physician friend of mine.  He had copied his next door neighbor’s Living Trust, substituting his name for his neighbor’s wherever he found it.  I spent about 3 minutes reviewing his trust when I asked him if it was the physician’s intent to leave everything he owned to his neighbor’s children.  In other words, the physician had failied to change the name from his neighbor to himself in one place in the document.

What’s my point?  One doesn’t know what one doesn’t know!  So if you have maybe $25,000 to your name and no children, what the heck.  How bad can you screw things up if you do it yourself, internet or otherwise.  But if you have a significant amount of assets, then it is probably worth it to spend the money and hire an experienced lawyer to handle things.  The determination of what is a significant amount is, obviously, an personal and individual opinion.  How do you find an experienced lawyer?  You might try my article Is Your Attorney Board Certifed? Why Should You Care?  And in my frequently asked questions on estate planning here is a way to question an attorney to get a “feel” for whether they are truly competent or not.  And here’s an article I wrote maybe 20 years ago about what you are really paying for when you hire an attorney (hint–it’s not the form)!

One other comment from someone that appeared in the Forbes article related to lawyers who will do your document for “$220 per hour for an indeterminate number of hours.  Most people are not willing to give a blank check to a lawyer when there is an alternative.”  (The alternative, in this case, was Legal Zoom.)  Actually, many estate planning attorneys quote flat fees for Wills and Trusts, so this really should not be a problem.  Just ask the attorney if he does Wills and Trusts by flat fee or hourly.