Who Can Prepare Estate Planning Documents?

A reader in Arizona points out that paralegals can prepare trusts, wills, and other documents needed for a successful estate plan

Q: As you are attorneys, you may not like to hear that in Arizona, paralegals can prepare estate planning documents. This includes trusts, wills, powers of attorney and all the other estate plan documents needed for the successful departure from this life.

Trust Distribution Held Up

Here’s how it worked for us. In 2014, we paid $1,000 to put our home into a living trust we had created. The fee included the deed and recording fee along with the trust. I then put all financial accounts into our trust except those that I had filed beneficiary designations, like qualified retirement accounts. Later, I changed one property where I had created a transfer on death instrument TODI) to put the property into the trust.

When one of my kids died during Covid, I had to change the successor trustee. I only had to pay $400. That fee included the revised trust document, living wills, powers of attorney for financial matters and health care. Other states may also have this option available instead of an attorney for relatively simple situations.

Trusts Need Their Own Checking Accounts

A: Thanks for your comment. To be clear, Sam is an attorney, Ilyce is not. And, we don’t mind your comment about how some people can save money in their estate planning. We think saving money where you can is a smart move. And, you’re right. Many attorneys won’t like it if people are able to take care of some or all of their estate planning needs on their own without using an estate planning attorney.

In some parts of the country, real estate attorneys aren’t used in residential real estate purchases and sales. But both of us believe that many buyers and sellers can benefit from the expertise that a real estate attorney brings to the table. Over the many years we’ve been writing this column, we’ve heard from plenty of buyers and sellers who didn’t use an attorney and wound up with difficult deals that either failed or cost them a lot of extra money.

Revocable Trust: Get It Right the First Time

The purpose of an attorney in a residential real estate transaction is to keep the seller and the buyer from suing each other. Sometimes things go wrong in a house deal. However, properly drafted and negotiated documents can prevent misunderstandings and avoid litigation.

We do want to clarify that in many states, real estate attorneys may act as settlement agents, but they do not represent the buyer or the seller in the transaction. Also, mortgage companies will hire an attorney to represent them in a closing. Those attorneys also do not represent the buyer or seller.

Estate Planning: Holding Title as Tenants in Common Causes Problems

But there are plenty of states where buyers and sellers regularly hire an attorney to represent them and their interests.

We often hear from buyers in sellers in states where real estate attorneys are not customarily used that their real estate agent “helped” them with the contract. Real estate agents are great partners that help buyers and sellers in real estate transactions, but they are not supposed to give legal advice. Their role might be to fill in forms on a contract and act as a facilitator to get the deal done. But when the going gets tough, they may simply refer the buyer or seller to a litigation attorney. Better to avoid getting into that situation in the first place.

Back to estate planning. When it comes to drafting a living trust and then putting the home into that living trust, make sure that you do it correctly. A living trust or deed that is prepared incorrectly, or a deed that does not get recorded properly, can cause huge problems for your heirs once the owner of the trust and property dies.

Estate Plan Mistake

Don’t make that mistake. There are capable individuals that can assist you with living trusts and the recording of deeds. Whether these people need to be, or are required to be, attorneys will be up to the laws of each state.

Over the last couple of years, more digital companies have been started to help people set up living trusts and other estate planning documents. For an extra fee, they’ll even have an attorney review the documents before sending them out to the individual for signature. Some of these even have packages that help people put together a will, living will, living trust, health care power of attorney, and a power of attorney for financial matters for one price. That price is likely a fraction of the price you might pay an attorney.

Before you consider using someone who is not an attorney, or an estate planning website, to draw up your documents, think about what assets you own, what you want to get out of the estate planning process and what you’ll need to do once you move forward one way or the other.

Paid Off House: Will It Affect My Trust?

Let’s say your assets are clear, simple and well below the amount where you would owe federal or state estate taxes. You might be able to use an estate planning website for a basic will, trust and other documents, and pay a relatively low fee. For some estate planning websites we’ve tested, that fee could be below $1,000.

Again, saving money is a good thing. But don’t expect to receive the same level of documentation and services from an estate planning website that would ordinarily come from an estate planning attorney. You should educate yourself before using these services to have a general understanding of what you need and what documents you want to end up with.

Finding the Will Saved the Day

Finally, if you set up a trust, whether it’s with an estate attorney or an estate planning website, and you don’t transfer your assets into the name of the trust, it won’t do you any good. An empty trust is like an empty box. Your heirs will still have to go through the probate process.