Dangers of “Do It Yourself” Estate Planning

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Creating a legally valid estate plan requires careful planning and consultation with your attorney. The prevalence of online legal services has led many people to believe they can create legal documents cheaply and those documents will be just as effective as if they had visited an estate planning attorney. The majority of the time this is wrong. Usually when I see these will forms, they are not executed in compliance with Arizona law and are invalid.
Initially, if you think all you need is a “simple” will or trust, these online services can be tempting. However, while going it alone with a book or a form may save you money now, it likely will cost you and your loves ones more in the future.
Online sites offering “estate plans” are little more than document mills that churn out the same generic forms over and over. They are not attorneys and cannot advise or warn you if you make a mistake. Plus, who will be there for your family when something happens to you if you’ve used an online document drafting service?
One size doesn’t fit all; your family is different from everyone else’s family. Just like every state has different inheritance laws, every family has different situations. An online form will not help you protect a child or relative with special needs, or protect a child’s inheritance from creditors or a nasty divorce. An online form cannot tell you how to protect assets from taxes or help you achieve your financial or charitable goals.
An estate planning attorney creates an entire plan tailored to your individual needs in legal documents that will stand up in court, and advises you on ways to cut taxes now as well as in the future, save for retirement and long-term care and truly protect your unique wishes. We make certain all documents are witnessed and notarized according to Arizona law. No online service does that.

Myths and Facts Regarding Probate and Trusts

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Myth: Probate costs and attorney fees are usually as high as 10% of your estate.

Fact: Arizona court costs to open a probate are very modest. In addition, Arizona lawyers may charge only reasonable fees for necessary services, not percentage fees. Fees may increase in the event of tax issues, disputed creditor claims, or other litigation, but these same issues can arise with a trust.

Myth: In probate, assets are not distributed for several years.

Fact: An informal probate procedure can start as early as five days after death, and distribution can occur as soon as it is clear there are sufficient assets to pay expenses, creditors and taxes. Creditors have up to four months to submit claims and the personal representative may, but need not, delay distribution until the end of the creditors’ claim period. A trustee may also have to delay distribution to pay taxes or divide property. An improperly prepared trust may require money and time to correct before distribution can be carried out.

Myth: Probate forces the liquidation of your assets.

Fact: Liquidating assets is necessary only to pay expenses, creditors, taxes, or to make distributions to beneficiaries. Assets may be transferred in kind.

Myth: Probate litigation is more expensive than trust litigation.

Fact: Unhappy family members or beneficiaries can challenge both wills and trusts. A trust is not a guarantee against litigation. Expenses will depend on the nature of the litigation. Call me if you foresee future litigation concerning your estate.

Myth: A trust will avoid federal estate taxes.

Fact: A will or trust that provides for a “credit shelter trust” arrangement can reduce estate taxes for married couples who have combined assets over the federal estate tax exemption ($10,860,000). A trust in and of itself does not reduce estate taxes at an individual’s death, nor does a will.

Myth: Probate proceedings are complex and require special court approval.

Fact: In Arizona, most estates use informal probate procedures that do not require formal court approval. In most cases, personal appearance in court is not required.