Document Assistant Danger

The Dangers of Document Assistants

The use of online estate planning documents (i.e. have become widely popular over the last decade. These documents are designed to make estate planning cheaper, faster, and easier. However, if you rely on online documents to plan your estate, you are faced with severe risks that could ultimately make your estate more expensive, more time consuming, and much more difficult for your family. Your family could end up paying more in estate taxes than it would have cost to hire an attorney in the first place, or certain intended beneficiaries of your estate might not take anything.

Online Documents Are Overly Generic

Many of the estate planning forms you find online are known as document assistants. These documents simply allow you to fill in the blanks on a form, but do not take into account your individual and personalized situation. Everyone’s financial situation is different, and sites such as LegalZoom do not give you individualized guidance as to how you can best convey and protect the assets you have spent a lifetime saving. LegalZoom cannot give advice, counsel, strategize, or recommend anything to its customers. If it did, it would be committing the unauthorized practice of law, which is in violation of the law. LegalZoom even has a disclaimer that reiterates that point. Its employees merely type your information into a generic document without considering what the best plan is for you. An estate planning attorney, however, can give you personalized advice that will provide you with the peace of mind that everything will be in order upon your death.

The Danger of Estate Planning Forms Being Invalid

If you’ve already filled out an estate planning document to save money, there’s a chance it may already be invalid. Most estates are more complicated than people think, and generic online documents may be too ambiguous for the probate court to interpret what your wishes actually were. Furthermore, online form users typically do not execute their documents correctly. When the documents are not signed properly or if a document is too ambiguous to admit to probate, the whole document can be held invalid, and the state’s laws of intestate succession kick in. When that happens, your entire estate goes to either your surviving spouse or your next closest blood relatives (usually your children). Therefore, if you had a long-time girlfriend or boyfriend or possibly stepchildren that you raised as your own, they would not take anything under Ohio intestate succession.

The “Simple” Trust

Recently, online estate planning sites have begun offering simple trusts in addition to simple wills and powers of attorney. However, there is no such thing as a “simple” trust. Trusts are very complex and powerful documents that need to be molded to your particular situation. Generic online trusts might provide or fail to provide certain provisions that are imperative to how you want your assets protected and distributed. A trust is considered a non-probate asset, meaning the assets inside the trust bypass the probate process when you die. Failing to properly draft your trust could result in the trust failing, and your trust assets going through probate. Probate is an expensive and time-consuming process that will put a major burden on your family. Don’t put that burden on your family during their time of grieving.

Potential Tax Implications that Online Documents Miss

Moreover, an online estate plan does not take personalized federal estate tax exemption possibilities into account (note that Ohio repealed its estate tax in 2013). Not having a lawyer work around different estate tax exemptions could ultimately lead to a huge estate tax bill for your family. A couple hours of a lawyers time now could save your family a lot of money in estate taxes down the road.

Bill Hesch is a CPA, PFS (Personal Financial Specialist), and an attorney licensed in Ohio and Kentucky who helps clients with their financial and estate planning. He also practices elder law planning, corporate law, Medicaid planning, tax law, and probate in the Greater Cincinnati and Northern Kentucky areas. His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky. Don’t put your family in a difficult spot when you die. Contact Bill to review your online-prepared documents.