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.