Ethan R. Okura
Hawai‘i Herald Columnist
Most of us have heard of the option of preparing your will online. In the old days, you could go to a bookstore and buy a form book containing fill-in-the-blank legal forms such as a Durable Financial Power of Attorney, Last Will and Testament, Health Care Power of Attorney, and maybe even a deed or a trust. These days, you can find websites that offer basic do-it-yourself estate planning.
Is this a valid option? Should you set up a DIY estate plan online?
Personally, I think it’s good to have options. There’s a limited group of people for whom a DIY estate plan might work. But how do you know if DIY is right for you? The biggest draw for most people who decide to do a DIY plan is its cost-savings. It’s true that DIY online estate plan document preparation is rather inexpensive as far as up-front costs go. But doing an estate plan yourself could end up costing your heirs a lot more than the difference in price you would pay by hiring a competent, careful, creative and thoughtful attorney.
What could go wrong, you ask? Let me count the ways . . .
First, how do you know which plan is right for you? What documents do you even need? Should you just get a basic package that includes a will, a Power of Attorney, Advance Health Care Directive and HIPAA Authorization? Do you also need a revocable living trust? What about an irrevocable trust? What will the plan protect you and your estate from? Will your plan avoid probate and conservatorship proceedings? Will it protect you and your heirs from lawsuits and divorces? Will it protect your assets from the expense of nursing home costs? Will it minimize estate taxes and capital gains taxes while also accomplishing all of the above?
Second, how do you know whether you have covered the appropriate formalities? Let’s assume that you did lots of research and/or got an opinion from a competent lawyer-friend regarding what types of documents you need to execute in order to protect your estate from the threats facing you. If you DIY, how do you know you did it right?
Recently, a prospective client came in and showed me the last will and testament she prepared online. The document itself was basic. However, it was not a valid will, even though it had been notarized. A valid will in Hawai‘i must be witnessed and signed by two adult witnesses. Notarization is not a requirement. Besides, a notarized will is still invalid unless it has the two required witness signatures. Neither she, nor her notary, nor whoever produced the will form was aware of that basic fact.
I also met with a client who tried to do his own will by relying on the “holographic will” exception. An exception in the law allows someone to hand-write and sign his or her own will, and it is considered valid even without any witnesses.
Holographic wills were accepted as legal in order to allow people facing imminent death to write a will without the presence of witnesses. Soldiers in war and sailors at sea are good examples of those who might need a holographic will. The client who visited our office had typed his holographic will and signed it. In order to be valid, however, a holographic will must be handwritten, so this, obviously, did not work, either.
If you created a revocable trust in addition to a will, you need to make sure that you also fund the trust properly. Without proper guidance, it’s unlikely that you can accomplish that on your own.
Another potential client who created a DIY trust online contacted me. He was a sophisticated real estate investor and real estate agent. He just wanted me to answer a “quick” question for him so he could finish funding the trust he purchased online. It turns out that even after 30 minutes of generous pro bono assistance from me, he still didn’t quite understand how to properly fund his trust because the Mainland, online DIY website did not prepare a short form trust for him to accompany his full, long form trust document.
Third, how do you know that it has been drafted correctly and when it is time to update and change your plan?
Good, precise legal drafting is a very specialized skill developed through lots of training and appropriate experience. There are many “good” lawyers out there who have no estate planning experience and no idea of how to properly draft wills and trusts. We have to consider all of the unlikely, but possible, circumstances that might come up and take them into account. Albeit unlikely, it is possible that all your children and grandchildren will pass away before you do. Have you considered what would happen to your estate in that case? Oftentimes, lawyers who do not specialize in this area can draft a basic will, but miss out on tax advantages, create inadvertent problems, and not even protect your assets from probate, let alone from creditors, divorces and nursing home costs.
To summarize, I think it’s rarely a good idea to do it yourself. There is a reason lawyers spend three years in law school and a minimum of three to five years in estate planning practice before they have a good sense of how to properly prepare an estate plan. After all, you could read online how to do surgery and operate on yourself . . . but I wouldn’t recommend it. Would you?
© OKURA & ASSOCIATES, 2020
Honolulu Office (808) 593-8885
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Ethan R. Okura received his doctor of jurisprudence degree from Columbia University in 2002. He specializes in estate planning to protect assets from nursing home costs, probate, estate taxes and creditors.
This column is for general information only. The facts of your case may change the advice given. Do not rely on the information in this column without consulting an estate planning specialist.