If You Have a Trust, Don’t Settle for a False Sense of Security – Part I

It is estimated that more than 80 % of trusts fail at the trustor’s death. EIGHTY PERCENT! What a shameful statistic. Think about it. Out of every five people who put the time, effort, and money into creating a trust, only one of them actually protects and provides for their family as they intended. That means the vast majority of people with a trust have nothing more than a false sense of security while they are living and leave their family with a big mess to clean up after they die.

There are three equally important phases to trust-making. Neglect any of these phases and your trust is likely to fail. Phase 1 is the actual creation of your estate plan documents. This includes not only the trust, but many other critical documents as well (your will, powers of attorney, healthcare directives, HIPAA waiver, kids protection plan, etc.). Each of these documents should be customized to your own specific situation, goals, and assets. Remember, your family is unique and your estate plan should be, too.

The courts are filled with cases where simple, fill-in-the-blank, template wills or trusts, downloaded from the internet, led to family disputes, ugly probates, expensive litigation, and hundreds of thousands of dollars (or more) in lost inheritance for intended beneficiaries. The recent family quarrel over an “E-Z Legal Form” estate plan serves as one such cautionary tale. But all one really has to do with such services is read the fine print, such as the Legalzoom disclaimer, to be very clear they’re just selling documents, without any legal guidance, advice, direction, or guarantee about what they mean or whether they’ll even work.

Unfortunately, people who get sold on saving a few thousand dollars now by doing it themselves, often force their families to hand over tens of thousands of dollars to lawyers later, to straighten out the mess they’ve left behind. Of course many times those messes cannot be straightened out at all. But it’s not just online legal services selling a false sense of security. I’ve also heard far too many stories of cut-rate, cheaper-than-anyone-else lawyers whose plans don’t work when they’re needed. And yet again, it’s families who are left holding the bag.

This should all be malpractice, if you ask me. Regrettably, it’s common practice instead. So what can you do to protect yourself – and more importantly, protect your family? Here’s how NOT to get sold a false sense of security:

1. If the lawyer or service you’re using to prepare your estate plan doesn’t first spend some serious time asking you questions, getting to know you, your background, and your goals, they are much more interested in selling you a set of documents than a plan that will actually work. And if they quote you a fee before getting to know you first, that’s a good indication they are never going to invest their time in you.
2. Ask the lawyer or service if they are available to provide guidance and answer questions throughout the process. If they answer is no, move on. If the answer is yes, ask them how much they charge for that. If it’s not included as part of a flat fee, they are clearly more concerned about selling documents than they are about providing good legal counsel.
3. Determine if the plan fee is too good to be true. If the lawyer or service undersells everyone else, that’s a big red flag. It takes a lot of work and time to customize a plan for someone so it is guaranteed to perform as intended. Cut-rate firms and services work on a volume based business model. Their goal is to sell you a set of documents with the smallest time investment possible, then move on.

You can, and should, strive to do better than that. Don’t settle for a lawyer or service who’s just in the business of selling documents. There’s too much at stake and your family has too much to lose. The documents are critically important but they should not be the sole focus of the lawyer or service you work with. The documents alone won’t give you real security – the kind of security both you and your family deserve.

To your family’s health, wealth, and happiness,