Do-it-yourself Estate Planning services have been rising in popularity for years because of how easy it is to do from home, low costs, and heavy advertising of companies like Legal Zoom, We The People, and other document preparation services. Although DIY document preparation may sound like a great option, the product you end up getting may cause great frustration and significant expense in the long run.
Here are 3 reasons that you may want to reconsider using an online or other document preparation service to put together an estate plan:
1. False Sense of Security
One of the main reasons people want to put together a will and trust is that they want to feel that they have done what is necessary to ensure that their loved ones are protected if the unimaginable happens. However, that protection is only as good as the expertise that went into the planning in the first place. Because Legal Zoom and others are not allowed to offer legal advice, you can only select limited options, chosen by the document preparation service, and which may not suit your needs If you don't understand what is being asked or can't figure out which option best suits your situation, there is no one to ask or explain your question to. LegalZoom cannot give legal advice and will not know if the customer is heading down the wrong path when answering questions. When it comes down to it, what you are really paying for when you hire an attorney over a document preparer is the expertise to identify issues that you may have not even considered, but are critical for ensuring your wishes are carried out. The wrong terms or missing provisions in a Will or Trust can create internal conflicts and prove disastrous to the enforceability of your wishes long term. Your spouse and/or children may end up paying the price long after you've passed away.
2. More Expensive Than You Realize
Legal Zoom initially claims that their comprehensive estate plan starts at $249. However, upon further inspection, the real costs for an estate plan bundle in California for a couple, including the printed document and portfolio, ends up running a little over $400. Note though, that this does not include re-titling certain assets such as your home. A separate service is required to prepare and record a new deed so that your house can become a trust asset. Through Legal Zoom, this can cost over $400 to perform. Finally, most of the documents in an estate plan need to be notarized and/or witnessed in order to be effective, a service which is not included in Legal Zoom's packages. In general, a comprehensive estate plan for a couple will have 20+ signatures that need to be notarized. In California, notaries can charge $15 per signature by law, leading to an additional $300+ in potential costs. Adding everything up, a fully executed and funded estate plan through Legal Zoom may run over $1,100 without any help or input from a real attorney.
Note, that although Legal Zoom offers a service where an attorney reviews your plan and answers your questions, it is no substitute for having your plan prepared by an attorney in the first place. Legal Zoom's included 30 minute consultation is not enough time for a competent attorney to actually review your documents and serves more as a referral service for the lawyer to bill you at a standard hourly rate when the short consult is not enough to be helpful.
3. Lack of Ongoing Support After You Sign The Papers
Customers of Legal Zoom may not realize that creating and signing the paperwork is only about 50% of the process. Your estate plan may mean very little without the final steps of re-titling accounts, changing beneficiaries on life insurance policies and retirement accounts, and recording new deeds for property.
For the most part, self-help document preparers consider the job done once the documents get delivered. This period though is the most critical because without performing these actions, your plans are effectively worthless. Worse, without good advice, you may inadvertently name beneficiaries or account holders improperly, which can have major tax implications and could cost you tens or hundreds of thousands of dollars down the line. Having a lawyer assist you with the funding process ensures that your assets are properly positioned if your estate plan needs to be implemented.