Let’s take some time to discuss do-it-yourself estate planning. While it may appear that lawyers want to discourage clients from utilizing books, software, and websites because they produce documents for free or a fraction of legal fees, the reality, is that do-it-yourself planning presents a variety of oddball things that a layman wouldn’t consider. These mistakes can result in losses more substantial than the money you saved in legal fees in the first place.
For example, take Eileen Guerin Swicker, a lawyer with her own practice in Leesburg, VA, who recently shared a classic example of the thin ice a client may be standing on when setting up his or her own living trust.
Both a will and a living trust has unique uses and features and can be used to transfer assets. For example, only a will can name guardians for children who are minors. Dissimilar to a will, a living trust can initiate while you are alive, enabling it to hold assets for your benefit in the event you become unable to manage them on your own.
Swicker’s client set up his own trust in 1984, using a 3-page form that he purchased from an office supply store. He recorded a deed to transfer his home into the trust, but mistakenly dated that deed 1983 (one year before the trust was ever created). Twenty six years later, in 2009, his client, who had paid off the mortgage on the house, decided he wanted to borrow against it. He intended to give his adult daughter $300,000 in cash so she, in turn, could pay off the mortgage on her own house. While this is a great strategy, his clerical error from a quarter decade earlier returned to haunt him. The title company claimed she didn’t have a clear chain of title to his home, so the bank wouldn’t grant him the loan. This client, now 75, contacted Swicker’s previous law firm distraught and in tears, seeking counsel.
However, at this point, fixing the problem required a convoluted process that took two weeks and nearly $2,000 in legal fees for the client, close to twice what it would have cost him in 1984 if he had the firm draw up the trust instead of doing it himself, Swicker says.
Despite the error, Swicker hoped the client would seek their help to bring his estate-planning documents up to date. By the time she had left the firm close to eight months later, the client still hadn’t done so. It was a classic case of somebody digging a hole, and letting time make it deeper and deeper.
Attorney Christopher J. Berry is a Metro Detroit estate planning and elder law lawyer who helps families, seniors, veterans and business owners with their important legal needs. Oakland County estate planning lawyer, Christopher Berry is a partner in the Bloomfield Hills law firm of Witzke Berry PLLC. Mr. Berry practices in the areas of estate planning, business, probate, veterans benefits & Medicaid planning. Follow Christopher on Twitter @chrisberryesq