Don’t be Fooled by Do-It-Yourself Online Estate Plans (Part 2 of 2)

An estate planning attorney listens to your wants and needs and turns your wants and needs into language that will actually carry out your goals. Online services tend to hedge against any sort of guarantee that their document(s) will work: “[The online service does] not warrant that the content is accurate, reliable or correct; that the services will meet your requirements…” (Terms of Service, para. “No Warranty”). If the estate plan doesn’t carry out your wishes, what’s the point of having one at all?

Under the DIY form document, I couldn’t give my property as I wanted to. The online service’s questions asked me who I wanted to make specific distributions to and then who were the one or two people that I wanted to receive everything else.  No other distribution scheme was available. I wanted to give 75% of my estate to my parents and have the remaining 25% going to several charities. However, that was not an option that the online service supported. Further, if any of my beneficiaries predeceased me, the software forced me to give the gift to that person’s descendants. I was not allowed the option to name a different backup, a charity backup, or to split the distribution pro rata among my remaining beneficiaries.   Regarding the charities, there was no guarantee that I named the charity correctly.  A regular occurrence in our office is somebody wanting to leave money to The Dumb Friends League or the Catholic Church.  Which Dumb Friends League?  Which Catholic Church?  While this seems like a minor issue, it comes up regularly.  An experienced estate planning attorney asks a few more questions like what exactly do you want this money to be used for, figures out the appropriate beneficiary, and checks online for the formal charity name and tax ID number.

In addition to their narrow disposition options, I found a number of errors and missing information in the online service’s documents. First, their Powers of Attorney failed to include a provision revoking or terminating a prior Power of Attorney. In Colorado, signing a new Power of Attorney does not automatically revoke a prior Power of Attorney. With their documents you could have a confusing array of multiple POAs naming different people with different powers, all of which would be valid. Second, their Will uses the term “executor” to describe what, in Colorado, is called the “Personal Representative.” Third, their Will requires your executor to petition the court for “independent administration” of the estate. That is not an option in Colorado. If the executor is filing to open probate with that Will, the executor may not realize what you actually want is an informal, unsupervised probate administration. Fourth, their Will failed to define several key terms including children. The definition of children can be incredibly important and divisive if a family includes adopted children, children from a prior marriage, half-siblings, and/or step-children. Finally, the service omitted any mention of how the client should handle the Will after it’s signed. This online service gave no warning that any writing on the Will can invalidate it.

If you own real property, the online service I used offers an upgrade, for an additional fee, that will provide you with a transfer on death deed. More commonly known as a beneficiary deed, this document, after recording, allows you to name beneficiaries who will receive the real estate upon your death, without the real property having to navigate probate. The online service provides a printable deed, ready to go, no attorney needed. The danger is that without an attorney involved, you would be extremely unlikely to know whether the deed was correct or not. Do you know the difference between tenants in common and joint tenancy? Do you know which one applies when neither is specified? Do you know what your property’s legal description is? Are you transcribing the legal description from the deed or deed of trust? Do you know if transfer tax applies? Do you know how to properly record a deed? Do you know what language the deed requires to legally transfer property? Most people would not know enough to double check the site’s work. They would trust the result and record it. This could easily create a situation upon your death where the deed is invalid and your effort was for nothing, or, worse yet, that the unclear deed creates a cloud on the title of the real estate that your personal representative has to sort out with an attorney.  Clearing clouds on title can cost thousands of dollars.

I know that for many people, these online services seem very tempting. You may be thinking that you don’t have that many assets; you’re a simple person who doesn’t need some fancy attorney-drafted plan. For a very small percentage of you, a DIY estate plan may be a good fit. If you have modest assets in your name alone and want to leave them to your closest surviving relative, then the American Bar Association believes that a DIY plan may be a good fit for you. Although, in that situation, having the Will would provide nothing that state law doesn’t already facilitate under the laws of intestacy (the statutory procedure for distributing an estate). To everyone else who is thinking: “a few joint assets aren’t that big of a deal, I can still DIY.” Or maybe “my assets could possibly be considered modest.” To you, I would quote my favorite maxim: “You don’t know what you don’t know.” That little bon mot essentially means that you aren’t aware of how many things you’re ignorant of. As estate planning attorneys, it’s our job to be aware of and up to date on estate planning law and issues. So where you see only straightforward assets and a loving family to distribute them to, we have the unfortunate job of illuminating all the pitfalls in that situation. We also have the fortunate job of fixing them for you. If you care enough about your loved ones to take the time and attention to plan your estate, then you want to make sure that they are provided for as you state. Don’t take a risk on something as important as that.