Hiring an Attorney vs. DIY Trust Setup

Setting up a trust is a crucial step in estate planning, helping to protect assets, minimize taxes, and ensure a smooth transfer of wealth to beneficiaries. However, individuals often face a key decision: Should they hire an attorney or opt for a do-it-yourself (DIY) trust setup? While online trust forms and DIY estate planning tools offer convenience and affordability, they come with risks that may lead to costly mistakes.

In this article, we'll compare hiring an attorney vs. setting up a trust on your own, covering the pros, cons, and critical considerations for each approach. If you need guidance in setting up a trust, contact us online or call 414-253-8500 to speak with an experienced attorney.

What Is a Trust and Why Do You Need One?

A trust is a legal arrangement where one party (the grantor) transfers assets to another party (the trustee) to manage for the benefit of designated individuals (the beneficiaries). Trusts help in:

• Avoiding probate - ensuring assets pass smoothly to heirs (Learn more about avoiding probate).
• Reducing estate taxes - particularly useful for high-net-worth individuals (Estate tax planning strategies).
• Protecting assets from creditors - shielding wealth for future generations.
• Providing for special needs beneficiaries - ensuring continued care without affecting government benefits (Special Needs Trusts).

There are different types of trusts, such as revocable trusts, irrevocable trusts, charitable trusts, and special needs trusts, each serving different estate planning goals. (Read more about trust options).

The DIY Trust Setup Option

With the rise of online legal services, DIY trust setup has become a popular option. Many websites offer templates and trust creation software that allow individuals to draft their own documents.

Pros of DIY Trust Setup

1. Lower Initial Cost
   • DIY trusts are typically cheaper upfront, with many online services charging between $100 and $500 for basic trust documents.
2. Convenience
   • Documents can be completed quickly online without scheduling attorney meetings.
3. Control Over the Process
   • Individuals can customize the trust without waiting on an attorney's availability.

Cons of DIY Trust Setup

1. Risk of Errors
   • Incorrectly drafted trusts may be legally invalid, leading to unintended consequences.
2. State-Specific Requirements
   • Trust laws vary by state, and online templates may not comply with local legal requirements.
3. Lack of Customization
   • Generic templates don't account for complex family situations, such as blended families, asset protection, or tax planning.
4. Failure to Fund the Trust
   • A trust is ineffective if assets aren't properly transferred to it, a common mistake in DIY estate planning.

When DIY Trusts May Be Sufficient

A DIY trust might be an option for individuals with:

• Simple estates with minimal assets and no tax concerns.
• No minor or special needs beneficiaries requiring complex planning.
• No business interests or real estate in multiple states.

However, even in simple cases, one minor error can cause major legal issues, potentially leading to probate or disputes among heirs.

Why Hiring an Attorney for Trust Setup Is the Better Option

While DIY trust setup may seem appealing due to lower costs and convenience, hiring an experienced estate planning attorney offers significant advantages that far outweigh the initial savings. A trust is a legally binding document that impacts your family's future, and ensuring it is structured correctly is crucial.

Pros of Hiring an Attorney for Trust Setup

1. Legal Expertise & Compliance

   • Estate planning attorneys understand state-specific trust laws and ensure your trust is legally valid.
   • They customize your trust to fit your unique financial and family situation.

2. Avoiding Common Pitfalls

   • Attorneys ensure the trust is properly funded by transferring assets correctly.
   • They draft clear language to prevent ambiguities that can lead to disputes.

3. Tax Planning & Asset Protection

   • Lawyers provide strategies to minimize estate taxes and protect assets from creditors.
   • They advise on specialty trusts, such as irrevocable trusts and Medicaid Asset Protection Trusts (Learn more about Medicaid trusts).

4. Custom Solutions for Complex Situations

   • If you have a blended family, own a business, or have beneficiaries with special needs, a lawyer ensures your trust addresses these complexities.
   • Attorneys help with trustee selection and guide trustees on their legal duties (Read about trustee responsibilities).

5. Ongoing Legal Support & Updates

   • Estate laws change over time. Attorneys review and update trusts as needed.
   • They assist with trust administration after your passing, ensuring smooth distribution.

Cons of Hiring an Attorney for Trust Setup

1. Higher Initial Cost

   • Attorney fees typically range from $3,500 to $8,000+, depending on the complexity of the estate.
   • However, the cost of fixing a poorly drafted DIY trust can far exceed this amount.

2. Time Commitment

   • The process may take weeks instead of hours, but this ensures a comprehensive and legally sound trust.

When Hiring an Attorney Is Essential

While a DIY trust may work for very simple estates, hiring an attorney is strongly recommended if:

• You have significant assets (real estate, investments, or a business).
• You need estate tax planning to reduce tax liability.
• You have minor children or beneficiaries with disabilities.
• You own property in multiple states, requiring complex trust structuring.
• You want to set up a specialized trust, such as a charitable trust (Learn about charitable trusts).
• You want ongoing legal support for future updates.

Cost Comparison: DIY vs. Hiring an Attorney

Factor	DIY Trust	Attorney-Prepared Trust
Upfront Cost	$100 - $500	$3,500 - $8,000+
Legal Validity	Risk of errors	Helps ensure compliance
Customization	Limited	Tailored to your needs
Tax & Asset Protection	Not included	Integrated strategies
Funding Assistance	Typically not provided	Ensures assets are properly transferred
Ongoing Legal Support	None	Available for future updates

What Happens If a Trust Is Done Incorrectly?

If a DIY trust is not properly executed or funded, it may result in:

• Probate court involvement - If assets are not properly transferred, they may be subject to probate (What is probate?).
• Legal disputes among heirs - Unclear language or errors can lead to family conflicts.
• Unintended tax consequences - A poorly structured trust can increase estate taxes instead of reducing them.
• Loss of asset protection - If legal protections aren't correctly established, creditors may seize assets.

Final Verdict: Is DIY Trust Setup Worth the Risk?

While DIY trusts may seem like a cost-effective solution, they come with significant risks that can result in financial losses, family disputes, and court intervention. Hiring an experienced trust attorney ensures your assets are protected and your wishes are carried out exactly as intended.

If you are considering setting up a trust, it's essential to do it correctly the first time. Contact us today for a consultation at 414-253-8500 or use our online contact form to schedule an appointment.

Frequently Asked Questions (FAQs)

1. What are the risks of using a DIY trust template?

DIY trust templates may not comply with state-specific laws, leading to invalid documents that won't hold up in court. They also often lack customization, fail to properly transfer assets into the trust, and don't address tax implications, which can result in probate issues and unintended financial consequences.

2. How much does it cost to set up a trust with an attorney?

The cost of hiring an attorney for trust setup typically ranges from $3,500 to $8,000+, depending on the complexity of the estate. While this may seem high compared to a DIY trust, the benefits of customization, tax planning, and legal validity outweigh the risk of costly mistakes from DIY solutions.

3. Can a DIY trust help me avoid probate?

A properly funded trust can help avoid probate, but many DIY trusts are incomplete because assets are not correctly transferred. If a trust is not legally valid or properly funded, assets may still end up in probate, defeating the purpose of creating the trust in the first place.

4. What types of trusts require an attorney's expertise?

Certain trusts, such as irrevocable trusts, Medicaid Asset Protection Trusts, special needs trusts, and charitable trusts, require legal expertise to ensure they comply with state and federal laws. These trusts have complex legal and tax implications, making attorney guidance essential.

5. How do I ensure my trust is properly funded?

To properly fund a trust, assets such as real estate, bank accounts, investment accounts, and business interests must be formally transferred into the trust's name. An attorney ensures all assets are correctly titled and legally transferred, preventing probate complications.