Why to Say NO to Web Based Legal Documents?
[vs. Attorney Prepared Documents]
We live in a time when web based products of all kinds are abundant and often the choices available via the web seem to surpass what is available through more traditional means. While web based legal documents can be an enticing option, particularly in practice areas like wills, trusts and estate planning. However, there are definite drawbacks to shopping on line for your legal protection.
The Risk of “Self Help” Legal Services
The first thing that folks need to know, and most of the legal forms websites actually tell you this, is that these services are “self help” which is nothing more than your putting together your own do it yourself (DIY) legal documents. Sure they offer some tools, however, by their own disclaimer they are ducking any responsibility for those tools and how they are prepared.
This would be the equivalent of a “self help” auto service center where you would get out of your car to change your own oil. Sure, they would provide the ratchets, the oil and the filter and would include a hefty disclaimer that says that “this is a self help oil change and we cannot be held responsible if the engine blows”. I do like this analogy and think its incredibly accurate except that it is easier to change your oil than to draft a revocable or irrevocable trust.
3 Common Shortfalls of Web Based Legal Documents
1. Web based legal documents are not able to truly ascertain what is important to the client’s estate because there is no professional to read between the lines.
For example, a questionnaire may ask if someone was previously married or if they own a business. That is about as far a a questionnaire can go. However, a good estate planning attorney will probe more deeply to ask about the relationship with the ex-spouse and any minor children. I’ve had clients who get along marvelously with an ex-spouse and not so well with the current spouse… Similarly a good trust lawyer would ask probing questions to determine how the business would keep operating or be sold if the owner dies or becomes disabled. Another example, a questionnaire may ask is who the desired successor trustee is…but cannot ask whether the children get along or how advisable it is to give one adult child power over the other adult child’s estate. These circumstances are often ripe for trust litigation which is what everyone wants to avoid.
2. Boilerplate living trusts created on line are likely to miss important special planning options because these options are generally not available on line.
For example, if a person has primarily assets in an IRA, then an IRA beneficiary trust may be more appropriate then the boilerplate revocable trust because this kind of trust will protect the beneficiaries proceeds from creditor attacks. Another example is where an irrevocable trust may be advisable for estate tax planning in Florida or where there are children from a previous marriage rather than putting everything in a boilerplate Florida revocable living trust. Another common situation is where the client is a Canadian citizen and another product such as a Cross Border Trust or Canadian Florida Land Trust may be more appropriate for the client’s specific planning needs.
3. A limited liability company created on line is of minimal value because an LLC is generally only is useful as its Operating Agreement and a boilerplate Operating Agreements are often not effective.
For example, web based legal document providers push LLCs all day long but they do not address 2 key questions that always arise if a lawsuit is filed involving the LLC. The first question is whether a proper LLC book was kept and how is this accomplished? The next and even more important question is whether the LLC Operating Agreement in Florida says the right things? More specifically, form pushers don’t tell you that Operating Agreements are supposed to be customized for the specific business and membership objectives. Also, an Operating Agreement should have creditor protection provisions in it and should specify what happens to the company and or the members’ respective interest in the event of death, disability, bankruptcy, or any other dispute.
Thus, a professional LLC creation process should include an in depth review of assets, business goals, and partnership roles.
So those were just three of the many things unspoken in the world of web based legal documents. As I’ve said before, your legal documents deserve careful consideration and what they say will become extremely important if and when difficult circumstances arise.
Steve Gibbs, Esq.
This is an updated version of an original post dated August 20, 2014.