A recent search for the term “online legal forms” returned 335,000,000 results. People use these forms every day to incorporate a business or draft a will or file a trademark. They are convenient and fast and seem to be relatively inexpensive. But are they really cheaper in the long run?
Often, however, clients come to us to correct problems created by forms that are used improperly, don’t fit the transaction contemplated, or are filled in incorrectly. This happens in all types of transactions from business, real estate, and estate planning. Fortunately, most issues can be fixed, albeit generally at a higher expense than if it was done correctly the first time.
One type of problem we see often is when a trust has been created but none of the trust property has been properly transferred to the trust. Upon the death of the settlor of the trust, it is discovered that the real property is not in the trust. This is a significant issue because a trust does not control what is not in the trust. Usually this can be corrected in California through the filing of a petition in probate court. It may not be so easy in other states. Of course, the problem is that the owner of the property has passed away or has become incapacitated. However, if the trust itself is defective, then a probate case will likely be required, defeating the purpose for creating a trust in the first place.
In another instance, we reviewed the online will that a client had prepared and realized that her will was invalid. It had been notarized but not in a way that conformed with California law. We drafted a valid will, which was properly witnessed, for this client. Had she not sought legal advice and passed away with the invalid will, the rules regarding California intestacy would have prevailed. In her specific case, this would have resulted in her second husband not receiving her entire estate, which would have frustrated her wishes.
One trust we reviewed had references in it to three different states in which the settlors had never lived. Shockingly, these life-long residents of California had no references to California law in their online trust.
In another case reported online, a brother intended to leave his sister $200,000 but incorrectly typed $200.000 in the online form. His sister received $200 when the brother died. Another client was preparing to purchase his employer’s business and the online form he was going to use would have not protected him from claims against the former owner which would have been a costly mistake.
In the world of online forms, there is no way to determine the qualifications of the people who prepared the forms that you are trusting with important legal matters. There is a common misperception that attorneys drafted the agreements which may or may not be the case. Whether the form you are planning on using is best for you is another question that these online legal services typically cannot answer.
When it comes to online legal forms and services, you get what you pay for and that fee typically does not include legal advice. In the long run, it is usually cheaper to hire an attorney to get the legal advice you need from day one!
Claudia J. McDowell is an attorney at Poole Shaffery whose practice focuses on corporate and business law, commercial law, securities, and trust administration. For more information, or to schedule a consultation, please call Claudia at (661) 290-2991.