Last Updated: 06/20/2018
Deciding to Draft Your Own Trust Portfolio Is A Bad Idea!

Why You Should Not Draft Your Own Trust Documents

Do It YourselferSure you can can draft your own Arizona legal documents if you like. But only a rare few persons I know have the legal knowledge to do so from scratch, that aren't trained paralegals or lawyers.

The "Do-it-yourself (referred to hereafter as a "DIY") crowd normally will buy a generic software program that ignores all specific state statutes in the provided templates. When you have a state like Arizona with one of a kind statutes under the Arizona Trust Code (ATC), ignoring state law can be a disaster when you actually have to administer a DIY trust.

This is so noticeable when these types of trusts come in for review. In fact, I just finished reviewing, replacing and revoking such a trust here in Arizona the first week of August, 2014.  There was a lot of money controlled by the trust and the client did a fine job of funding his self prepared trust.  But, he did not have a word of legal language dealing with his large IRA accounts.  Nor did he have any Arizona trust code language.  And not a drop of important IRA provisions.

This website explains elsewhere who you should avoid to buy your trust from.  In this section, we want to include yourself! Either hire a lawyer or an AZCLDP, (Arizona Certified Legal Documents Preparer), but please don't trust those DIY software programs.

I think the most important and fair information I can relate is that the quality of the work you seek should be top notch, up to date, and legally correct.  I've never seen a DIY live up to those 3 expectations.

A Story to Make My Point

IntelMany years ago, I had an Intel executive here in Arizona contact me with a challenge. He told me he thought he could create a full Trust Portfolio on his own, using a software program he had just bought. I took the challenge. A few weeks later, he called and asked me to review what he had done, sounding really proud over the phone about what he thought he had accomplished.

Now, you must understand that this was a smart guy.  Not only did he have intimate knowledge of how computer chips are assembled, but he could also take apart and rebuild high-end race cars in his garage. He drove a Dodge viper mind you!  Indeed he was able to do most mechanical things others would fail miserably at.

But, what he didn't know was that I had read every written book on Living Trusts in the early 1990's and had been collecting legal documents for many years before I started my legal documents practice. And since the start of that practice, I had written over 50 full Trust Portfolios. I sat down one night with him to review his work. One by one I circled areas of concern as well as outright missing clauses and statutes. His Trust was only about 16 pages in length with double spacing! (For the record, my original Trust back then was around 38 pages, single spaced!)

As an engineer who could master mechanical things with great ease, this prospective client quickly lost his smile and before long was asking me how much it would cost to draft his documents for him. I met the challenge back then because I was motivated to show that my system was better than a "do it yourself" software program, no matter who makes it. I have to warn you too: nothing has changed.

Just missing the important HIPAA waivers in your Arizona documents may subject the documents you create on your own from ever being fully useful. New medical information privacy laws must be drafted or at least addressed in your legal documents to stave off rejection by both health care providers and possibly some money institutions. It is generally accepted legal knowledge now that a simple paragraph with the HIPAA release waiver can most likely do the job. But writing that paragraph correctly is the key.

If you have already drafted trust portfolio documents on your own, and know a nurse or health care provider organization, just have a chat with them about our health "privacy" rules and see what they think about the usability of the documents you have created. Or, seek out an actual legal opinion from an Arizona lawyer, just to be sure you have a valid estate planning legal document that will actually perform when it is needed most.

It would be a disaster if grabbed a "spent" fire extinguisher if your chimney suddenly burst into a roaring flaming fire.  Equally, suddenly grabbing those "dusty" legal papers you did yourself a while back when the hospital asks for them and then being quickly told they can not be accepted or used -- could also be disastrous. All because they don't include the new HIPAA clauses. That would be a bad day for both appointed agent and patient!  In fact, having documents with old dates has recently been another problem with some of ours hospitals here in Arizona.

And, sadly, those who don't update their legal documents because they think they are like a car that never needs service -- I am aware that this disastrous scenario is happening to them each and every day! (And I would be willing to bet that at least 1/2 of those stalled cars you see all over Arizona were because of inadequate servicing as well!) 

Updates don't cost that much, but if you are not willing to update a modern Trust Portfolio from time to time, it most likely is not worth spending the money on it in the first place!

To learn more about HIPAA, use this link:  HIPAA INFORMATION

Additional Caution for Do It Yourself Trust Makers:  It also should be mentioned that the new Arizona Trust Code (ATC) dictates you get professional help. You may want to check with a lawyer to be sure you get the proper wording and provisions in this new trust law that became effective January 1st, 2009.  Or, you can use my firm as well, since extensive study and research on the ATC provisions was done by me when the law became effective.  Since early 2009 up until today, all FSI Legacy Trust Portfolio's reflect this important change in Arizona domiciled trusts. 

And, adding in the recent permanent change in estate tax law effective January 1st, 2013...a do it yourself trust maker could easily miss important provisions.  His or her heirs could suffer loss from stale terms that remain in old trusts (such as A/B splitting demands) that now can trigger large income tax bills for heirs since any "B" assets are not given a second "step-up" in value upon the second death of a husband and wife.

You see, we used to be more scared of the 50 %+ estate tax upon death then the income tax on irrevocable trust assets placed in a B (bypass) trust upon the first death of a husband and wife.  But, with portability options available to the surviving spouse (you can preserve unused credits for your own death), the former "fix" has become the "hitch" and most likely your older trust, if not amended, forces funding a trust upon the first death of a husband and wife that doesn't need to be done. 

And worse -- restricts income tax options to die income tax free for your surviving spouse on any estate "capital" asset that has grown greatly since the first death. 

Noting: Your main home still has the IRS 250k exclusion factor for a surviving spouse. 


25+ Years of Practice Shows in the "Legacy Trust" Custom Trust Portfolio

Financial Strategies, Inc. celebrated it's 25th corporate year doing business in Arizona in 2015! (July 4th!!!), I am proud to have delivered hundreds of trust portfolios to Arizona consumers.  All without one complaint ever!  In fact, no professional complaints in multiple states of practice have ever been filed in my multiple financial occupations or practice for all 42+ years of total practice!  



Disclaimer: The information contained on this site, though deemed reliable and accurate, is solely the opinion and statements of the advisor profiled. Therefore, it should be considered "general" in nature and no action should be taken based on this information until such time your specific situation and circumstances can be reviewed and analyzed by competent and qualified tax, insurance, legal, and/or other financial advisors. This information is not intended, nor should be construed as legal advice. FSI can not and will not give you legal advice. If you need legal advice, we can refer you if you desire and request it. Founded in 1990, FSI is a long-term Financial Advisory and Arizona domiciled Corporation now providing services nationwide and in some foreign countries. Services profiled herein are available unrestricted to Arizona residents. Residents outside of Arizona are eligible for certain consulting services and to legal (lawyer) referrals by our firm when requested of us. For Arizona residents, communication with an Arizona Certified Legal Document Preparer (AZCLDP) are private and confidential but are not "privileged", such as they would be with an actual Lawyer.

Besides being a licensed  Arizona Certified Legal Document Preparer, Mr. Anderson is also an Arizona Professional Accountant/Consultant  and registered IRS tax preparer and ERO (Electronic Return Originator) agent/firm. He also is an Arizona licensed Professional (Realtor®)/consultant (with Realty One Group) and a licensed Professional insurance agent and corporation for life, health or annuity sales. consultant and sales advisor. 

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