01Estate Planning Is Not One Size Fits All, or Even Most
Estate planning documents found in books or online and those generated by estate planning software are specifically designed to cover only the most basic estate planning needs. These generic forms are deliberately kept as simple as possible to comply with the laws of all 50 states and the District of Columbia.
But everyone's estate planning needs are different. What will work for you and your family will most likely be different from the needs of your sister, your parents, or your next-door neighbor. The bottom line is that a generic revocable living trust generated by computer software won't do you or your loved ones any favors.
02Trust Laws Vary Widely From State to State
Unlike the federal estate tax laws, which apply to all U.S. citizens, state laws are all over the map when it comes to probate, state estate taxes, gift taxes, and inheritance taxes. This is particularly true of wills and trusts. Then there are the legal formalities required to write and sign a valid trust agreement. Added to that are many state-specific issues that can affect a trust, including the definition of descendants, anti-lapse statutes, community property laws, homestead rights, common law marriages, putative spouses, and elective share laws. Here again, its unlikely that a generic trust form could properly address all of these specific state law issues.
03The Proof Is in the Disclaimers
The immediate problem with books or software programs about estate planning is the same or similar type of disclaimer found on all of them: "The information contained in this book or program is not legal advice and is not a substitute for legal advice. For legal advice, consult with an attorney." It's best to examine these materials with care.
04Buyer Beware: You Get What You Pay For
Saving on time and money is usually a good thing. But in this case, the long-term result of doing your own revocable living trust could prove disastrous. One case study showed a couple who had completed a revocable living trust using a well-known financial guru's estate planning software program. The couple lived in Florida, but the software-generated trust agreement software stated up front that it was governed by Nevada law.
The main issue? Florida is a separate property state while Nevada is a community property state, which completely turned the couple's trust into a nightmare to administer. Because the couple didn't know what they were doing when they created the trust using the generic software, a form was generated that ended up being inappropriate for their particular situation. Don't just read the fine print. Understand and question it.
05Factor in Real Estate Laws
The good news is that real estate can be conveyed in the living trust, but a deed to the trustee is required. More good news: The trustee of such a trust will have the same control a title owner has regarding the property. Remember that property you own outside of your home state likely has trust laws that differ.
06How to Successfully Create and Maintain Your Living Trust
Estate planning is not something that you should do yourself, without the assistance of a professional. Seek out a qualified estate planning attorney who is familiar with the probate, trust laws, and estate tax laws of your state to create and maintain your revocable living trust.
Ultimately, the time and money that you spend on the services of a qualified estate planning attorney to assist you with drafting and funding your revocable living trust will pay off in the long run.
The Pitfalls of Do-It-Yourself Revocable Living Trusts
Consensus in the legal community is that you should not write your own revocable living trust because the complexity is just too great, even with the aid of books, software, and online helps. Also known as living trusts, inter vivos trusts, or loving trusts, their importance is clear: they allow you to fast track transferring property after death without having to deal with the probate courts and the transactions are still handled privately. But a revocable living trust is not a do-it-yourself project.