LegalZoom and the dangers of DIY estate planning

A number of practitioners have written blog posts on LegalZoom and the dangers of do-it-yourself estate planning.  Here are three that were posted in May 2010:

[1] Candice N. Aiston, Is LegalZoom my competitor?, Oregon Estate Planning Blog, May 11, 2010. 

My conclusion is that I am undecided on whether LegalZoom is my competitor, but I will keep having the discussion about DIY estate planning, because I think it's dangerous, and because I think that people are paying money for a false sense of security.

[2] Candice N. Aiston, 3 Things Attorneys Can Learn from LegalZoom, Oregon Estate Planning Blog, May 21, 2010. 

1. Low prices are alluring. 

2. Convenience is a big deal.

3. The public needs our help more than ever.

[3] Rania Combs, LegalZoom vs. Lawyer: What You Don’t Know Can Hurt You, Texas Wills & Trusts Law Online, May 24, 2010. 

LegalZoom and other do-it-yourself document preparation services want you to believe that the process of preparing a will is as easy as filling in the blanks on standardized forms. . . .

In short, despite a disclaimer that their document preparation services are not a substitute for the advice of an attorney, they try to convince you that the advice of an attorney is simply not necessary. . . .

On the top left-hand corner of the page, LegalZoom reveals that 80 percent of people who fill in blank forms to create legal documents do so incorrectly. Despite this dislaimer, LegalZoom tries to reassure its customers that professionals are there to help; that customers can have “peace of mind” knowing that LegalZoom professionals will customize their will based on their legal decisions.

Combs’s article is especially interesting because it links to and comments on a will that Gregory Luce, the Practice Development Director at the Minnesota State Bar, created using LegalZoom.  Combs adds to the list of problems with this will:

Below is a summary of just a few of the ones mentioned by some attorneys who commented:

1. It failed to include an alternate trustee in the event the named trustee predeceases him or is unable or unwilling to serve.
2. It failed to include a self-proving affidavit, which means that witnesses would have to be tracked down in the event of his death to testify to the validity of the will.
3. It failed to provide guidance about beneficiary designations on non-probate assets which pass outside the will.
4. It failed to include a provision that would allow him to direct the disposition of personal property in a separate document.
5. It failed to address the contingency of the death of his children, or the birth or adoption of a third child.
6. It failed to include spendthrift provision in any of the trusts, which protect the trust assets from the trust beneficiary’s creditors.

One problem I noticed which was not mentioned in the comments was that the will potentially disinherited Greg’s oldest child by bequeathing 100 percent of his gross estate to his current wife.

There are other articles on the dangers of DIY estate planning.  Here are a few (listed in chronological order):

• Deirdre R. Wheatley-Liss, A Role for Lawyers after all? DIY Will almost Creates Unnecessary Estate Tax, New Jersey Estate Planning & Elder Law Blog, Nov. 28, 2005 (“Estate planning is fraught with formalities, which are intended not to impede you, the DIYer, but to protect you. . . . professionals are there for a reason.”).
• Leanna Hamill, The Dangers of Do It Yourself, A Cautionary Tale, Massachusetts Estate Planning and Elder Law, Jan. 13, 2009 (“There are ways to keep costs under control when preparing your estate plan.  Buying documents online just doesn’t happen to be one of them.”).
• David Shulman, HOW You Sign a Will Can Be Just as Important as What It Says, South Florida Estate Planning Law, Sept. 14, 2009 (“[E]ven if the ‘DIY’ Will is perfectly drafted, if it is improperly executed, then it is invalid.”).
• Gabriel Cheong, Why fill-in forms suck! Part 1: Over the Counter formed Wills, Boston Estate Planning, Nov. 1, 2009 (“Makes you wonder why Wills are even a part of a typical law school curriculum and why attorneys get extra training and LLMs in tax law and estate planning.  Chumps!”).
• Rania Combs, Planning Your Estate? Don’t Be Penny Wise And Pound Foolish, Texas Wills & Trusts Law Online, Jan. 11, 2010 (“At times, we may be tempted to do the job ourselves or to hire the cheapest service provider to do the work, only to realize at a later date that it probably would have been worth spending a bit more to have the job done right.”).
• Rania Combs, The Problem with LegalZoom (And Other Do-It-Yourself Estate Planning Solutions), Texas Wills & Trusts Law Online, Jan. 27, 2010 (“People who use LegalZoom and other do-it-yourself estate planning kits end up with a false sense of security.”).
• Rania Combs, The Problem With LegalZoom (Part 2) – Inaccuracies Corrected But Problem Remains, Texas Wills & Trusts Law Online, Feb. 12, 2010 (“[T]he real problem with LegalZoom can be summarized by its own disclaimer.”).
• Rania Combs, Do-It-Yourself Estate Planning Mistake Disinherits Child, Texas Wills & Trusts Law Online, Apr. 14, 2010.

I have covered the dangers of DIY estate planning on this blog before:

• Deborah L. Jacobs takes a firm stand against makers of DIY estate planning, Jan. 19, 2010. 
• LegalZoom: specific example of how DIY wills can be risky, Feb. 13, 2010.

My posts on this topic are aggregated under the following category: Dangers of DIY Estate Planning. 

(Special thanks to Rania Combs for bringing this important subject back to my attention.)

[Updated May 25, 2010 7:10 AM.]

Comments

[Jennifer Frantz]

Thanks for the links! These clients have their hearts in the right place by trying to do their planning for the benefit of those left behind, but could seriously be making things worse than by having done nothing at all.

Jennifer Frantz
Minnesota Estate Planning and Probate Attorney

[Brian Ellexson]

Hani, these links have been really insightful, thank you.

I think that most people, when informed of the risks of DIY estate plans, would make the choice to have their plans drafted and reviewed by an attorney, as opposed to potentially causing expensive and costly problems for their heirs. An estate plan for a middle-income family does not have to be prohibitively expensive, but it is more accurate to consider it an investment (of both time and funds) in the well-being of one's family after death, as opposed to merely a product for which the lowest price should be sought.

Brian Ellexson
http://www.eliaellexson.com

[paul stephen beeber,esq]

I tell my clients and potential clients that they can buy surgical instruments on the web and then can operate on themselves.... It's just like buying a will on legalzoom.

[Richard Habiger]

I recently had an opportunity to check out some LegalZoom documents.
The documents look "legal.” They are fairly simplistic from a technical perspective. But they will not work for what I or one of my elder law attorney colleagues would do. They do not cover everything that needs to be covered. The documents will not protecting a client's home and other assets in the event a client should need care in a nursing home.
Moreover because LegalZoom trusts are revocable, everything put into the trust are subject to a "spend-down" in the event there is a need for nursing home care.
LegalZoom provides documents. But law is far more than the preparation of documents. Documents are simple. Wisdom is harder to come.
To read my blog post on LegalZoom go to: http://www.habigerelderlaw.com/blog/why-legalzoom-is-not-the-answer.cfm.
To read my article on LegalZoom, go to: http://www.habigerelderlaw.com/library/why-legalzoom-is-not-the-answer.cfm.

[Oxy]

Great stuff...I think you've made some truly interesting points.Keep up the good work.

[Hani Sarji]

Thanks, Oxy. And thanks to all for the comments! DIY wills has been in the news recently (Forbes.com article and NY Times artice). I have a write-up that I'm revising. I'll post it as soon as I can.

[True Religion Outlet]

The only other thing this moment I feel definite about is that the stories we tell ourselves and share with ourselves are changing, radically. I've been hesitant to dive in publicly, because sometimes - well, ofttimes, pioneers are ignored. Their travels can easily becasfome travails.

[John]

I think you aren't really taking into account folks who just need a super simple will. For example, a married couple with two children, no trusts, no adoptions, no step parents. If the husband passes away, the entire estate goes to his wife (the mother of the children), if she has passed away everything is split up among the children. Boom, thats it. Why wouldn't a simple LegalZoom will be adequate for such a situation?