Do It Yourself Does Not Always Work

The Internet has made it easier for individuals to produce their own documents. Please note I used the word “produce” and not “prepare” because Do It Yourself (DIY) does not always equate to a good result.

The Florida Supreme Court ruled recently that a 2004 E-Z Legal Form (“Form”), which did not have a residuary clause, did not dispose of the decedent’s property and caused state intestacy law to apply. The decedent’s Form left her property to her sister, then to her brother if the sister predeceased the decedent, which she did. The Will used the phrase “all listed items” creating an ambiguity as to the disposition of non-listed items. After the sister’s death, the decedent signed a handwritten note leaving the decedent’s bank accounts that were not listed items to a niece, the daughter of the brother. The note was held to be invalid because the only witness was the person named to receive the accounts.

The outcome of the case was that the non-listed items, that is the bank accounts, passed by the laws of intestacy to the brother and to the nieces of the deceased sister. The brother lost and his daughter lost due to the ineffectiveness of the Form and handwritten note, respectively.

Many years ago a local CPA asked me to meet with a client of his whose spouse had passed away. Months went by without any contact. Almost one year later, the surviving spouse appeared carrying a federal estate tax return that he prepared. The deceased spouse left an IRA to their son as primary beneficiary and the souse as secondary. The account contained internet stocks that had exploded in value. Instead of the bequest being a token of affection, it cost hundreds of thousands in estate tax. The individual made a comment to me that he prepared the return himself and didn’t have to pay me or the CPA to prepare it. When I asked if he considered having the son disclaim part of the account so the value did not exceed the estate’s $600,000 credit. When I explained that my suggestion would have avoided taxes, he became upset. He later called and told me that the disclaimer I described was not in the IRS publication so the plan I proposed must not be legal. I patiently explained to him that the mission of the IRS was to collect taxes and was not to help taxpayers plan to avoid taxes. The man was a veteran and in his 70s, the kind that fought for his country and paid his taxes. He said he felt betrayed by the absence of certain useful information in that publication.

The point of the story is that the Internet is today’s equivalent of that IRS publication: sometimes helpful and perhaps well meaning, but not always complete and able to meet your needs..