Be Careful Making a DIY Estate Plan

Doing your estate plan on your own can lead you to lose protections you don’t even know you had.

Jake and Laurie were married when they purchased their home in Wheaton. Knowing that they purchased the home as their primary residence, their attorney had the sellers issue the deed to Jake and Laurie as tenants by the entirety. This protected each of them in the event that the other had a judgment creditor who came looking to enforce the judgment against their home. (Here is a previous post in which we talk about protections provided through tenancy by the entirety.)

Fast forward a few years–Laurie and Jake now have two kids and are starting to accumulate a small nest egg. They know they should be thinking about their estate plan, and Jake has seen TV commercials from “Speed Legal” where he can get a trust for $99.99. Being entrepreneurial, Jake thought he could complete the process himself. He filled in the checklist, and read through the trust document that the program spit out at the end, including the deed that he was told to record in order to transfer his home into the new trust. It all looked good to him and Laurie, so they signed the trust paperwork, recorded the deed, and went merrily along.

Two weeks later, Laurie got into a bad car accident while she was texting and driving, severely injuring the other driver. Thinking they were being frugal by keeping their premiums down, Jake and Laurie didn’t have enough insurance coverage for all the ensuing medical bills, and the other driver ended up getting a large judgment against her. Jake, however, was not named in the complaint or the judgment. The other driver then proceeded to lien their home and then forced a sale of it to pay the judgment.

Had their home remained in tenancy by the entirety, the other driver would not have been able to sell the home because he only had a judgment against Laurie and not Jake. (Tenancy by the entirety protects the marital home from being sold out from under the non-debtor spouse–see link above.) But because they did their estate planning on their own–with the help of a computer program and not an attorney–the deed that transferred their home to the trust, and the trust itself, did not have the language required by the statute to make sure that they kept the protection of the tenancy by the entirety their attorney properly set up when they purchased their home.

Using websites to build your estate planning documents for you could cause you to lose that protection that you may not have even knew you had. Contact us today to learn more about how to protect your family and your assets from potential creditors during both the purchase of your property and the building of your estate plan.

 

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Charles Wentworth
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Charles Wentworth
Charles Wentworth
Charles is an attorney in Glen Ellyn, Illinois. After graduating from the University of Utah, he clerked for Chief Justice John T. Broderick of the New Hampshire Supreme Court. He then became a litigation associate at Kirkland & Ellis LLP before opening his own office and partnering with Rick Lofgren. He lives just outside of Chicago, where he participates in community activities, including Boy Scouts and little-league baseball.