How Valid are Legal Zoom Trusts?
LegalZoom or other online trusts are a convenient way for people to convince themselves that they have protected their assets. By purchasing a few documents and submitting personal information online, clients believe they have taken proper steps to secure their future and their families. Yes, this process is convenient, but does it work?
That’s the issue with online, or what I like to call “cookie cutter” trusts. They are like parachutes or brain surgery — you never know if they are going to work until it is too late. Think about opening a parachute 50 feet in the air and noticing a huge hole in the parachute. It’s the same with estate planning — your trust may look shiny and nice, but is it going to work?
If you do end up forming an online trust, it is crucial that you vet whoever it is that helps you to make sure they understand the process thoroughly. The last thing you need is to spend money on a process that isn’t going to work for you in the long run.
What Happens if My LegalZoom Trust Doesn’t Work?
If your LegalZoom trust does not work the way you expected it to, you will more than likely have to go to court to see what you intended by certain provisions in your trust. If any of that is not clear, you will then have to go to probate for those assets, which is exactly what you were trying to avoid when you decided to get a living trust in the first place.
The most common issue is lack of placing the asset into the bucket (your trust). If the asset isn’t in the bucket, how can we know if you really intended to put it in the bucket? That’s when you have to go to Court to prove a deceased person’s intent. If that does not work, then you have to go through probate — the exact process you were hoping to avoid. Now, the issue is you need to go through probate AND pay an attorney for the other failed proceeding in Court. This is surely what you did not want to happen. But, it did with an online trust.
Going to probate can cost you greatly. Unfortunately, the chances of you eventually having to go to probate because of a failed LegalZoom trust are high because the average success rates of these cookie-cutter trusts tend to be low. Don’t take a short cut with a LegalZoom or other online trusts (like Trust and Will or Willing) because you will have to pay for it later. The only thing you will save now is a bit of time, but you will be costing yourself much more in the long run.
Your next step is to join our facebook group called “Parents Protecting Assets in California”. We provide valuable information on protecting assets from future in-laws and creditors!